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A   TREATISE 


ON   THE 


LAW  OF  BILLS  AND  NOTES, 


CHECKS, 


INCLUDING    THE    TEXT     OF    THE    NEGOTIABLE     IN- 
STRUMENTS LAW  OF  NEW  YORK,  CONNECTICUT, 
COLORADO,  FLORIDA,  VIRGINIA,  MARYLAND, 
AND  THE  DISTRICT  OF  COLUMBIA. 


CHRISTOPHER  G.  TIEDEMAN,  LL.D., 

OF  NEW  YORK  CITY, 

Author  of  Treatises  on  the  Laio  of  '^ Real  Property,''^   ^'Police  Power,^* 
"  Commercial  Paper,^^  "  Sales,"  etc. 


ST.  LOUIS: 

THE  F.  II.  THOMAS  LAW  BOOK  CO. 

1898. 


T 


Entered  according  to  Act  of  Congress,  In  the  year  1898,  by 

C.  G.  TIEDEMAN, 
In  the  Office  of  the  Librarian  of  Congress,  at  Washington. 


Press  of  Nixon- Jones  Printing  Co., 
St.  Louis,  Mo, 


PKEFACE. 

In  the  preparation  of  this  treatise,  the  author  has  had  in 
mind  the  needs  of  law  schools,  rather  than  those  of  the 
Bench  and  Bar  in  the  active  practice  of  the  profession ; 
although  it  is  believed,  that  the  practicing  lawyer  will  find 
as  much  aid  from  its  use  as  he  can  from  any  other  work,  on 
the  same  subject  of  the  same  size. 

The  writer  has,  recently,  in  the  introduction  to  his  Cases 
on  Real  Property,  explained  his  views  on  methods  of  legal 
education,  in  which  the  main  idea  is  the  combination  of 
exposidonf  by  the  use  of  a  carefully  prei)ared  text,  setting 
forth  the  principles  of  the  law;  and  illustration^  by  the 
study  of  a  few  selected  cases.  The  Cases  on  Real  Property 
were  prepared  to  be  used  with  the  author's  treatise  on  the 
same  subject;  and  in  the  present  instance,  the  selected 
cases  are  appended  to  the  succeeding  chapters,  whose  sub- 
jects they  are  intended  to  illustrate,  and  incorporated  in  the 
one  volume.  It  is  believed  that  this  feature  will  commend 
itself  to  a  large  number  of  teachers. 

The  citations  of  authorities  are  numerous,  considering 
the  size  and  purpose  of  the  volume ;  they  are  largely 
recent  decisions,  and  include  decisions  filed  in  1897.  For 
the  convenience  of  schools  having  small  libraries,  to  the 
official  citation  has  been  added  the  reference  to  the  Amer- 
ican Decisions,  American  Reports,  and  the  volumes  of  the 
Reporter  System. 

In  the  appendix  will  be  found  the  recent  New  York 
Negotiable  Instruuieuts  Law,  which,  with  the  exception  of 
three  sections,  has  been  adopted  in  the  additional  States  of 
Connecticut,  Florida,  Colorado,  Virginia,  Maryland,  and 
the  District  of  Columbia;  recommended  for  adoption  in 
Massachusetts,  Rhode  Island  and  South  Carolina,  and 
which,    it    is    expected,    will    ultinuitely    be    substantially 

(iii) 


740069 


IV  PREFACE. 

adopted  by  all  the  States  ;  in  conformity  with  the  recom- 
mendation by  the  conference  of  the  State  Commissioners 
on  uniform  State  Laws. 

Christopher  G.  Tiedeman. 
141  Herkimer  St., 

Brooklyn  Borough, 
New  York  City. 


TABLE    OF    CONTENTS. 


CHAPTER     1. 

GENERAL    CHARACTERISTICS    OF    BILLS    AND    NOTES. 

Section    1.  What  is  money. 

2.  Commercial  paper  defined. 

3.  Bills  of  exchange  —  Foreign  and  inland  bills. 

4.  Forms  of  bills  of  exchange. 

5.  The  effect  of  a  bill  —  When  does  it  operate  as  an  equitable 

assignment. 

6.  Promissory  notes  defined. 

7.  Form  of  a  promissory  note. 


CHAPTER    n. 

THE    REQUISITES    AND    COMPONENT   PARTS    OF    BILLS    AND 

NOTES. 

Section    7.  The  date. 

8.  Ante- dating  and  post-dating. 

9.  Name  of  drawer  or  maker. 

10.  Joint  and  several  notes. 

11.  Two  or  more  drawers. 

12.  Liability  of  one  or  more  joint  makers  or  drawers,  as  sure- 

ties. 

13.  The  name  of  the  drawee. 

14.  The  name  of  the  payee.       f 

15.  Fictitious  or  non-existing  parties. 

16.  Same  person  as  different  parties. 

17.  Words  of  negotiability. 

18.  A  distinct  obligation  to  pay. 

19.  Time  of  payment. 

V 


TABLE    OF    CONTENTS. 

Section  20.  Payment  must  be  unconditional. 

21.  Certainty  as  to  amount  of  payment. 

22.  Payment  in  money  only. 

23.  The  place  of  payment. 

24.  Acknowledgment  of  consideration. 

25.  Sealed  instruments  not  negotiable. 

26.  Delivery. 

27.  Delivery  as  an  escrow, 

28.  Delivery  of  bills  and  notes  executed  in  blank. 


CHAPTER    III. 

AGREEMENTS    CONTROLLING   THE     OPERATION    OF   BILLS   AND 

NOTES. 

Section  29.  Kinds  of  agreements. 

30.  What  memoranda  will  control. 

31.  Collateral  agreements. 

32.  Agreements  to  renew. 


CHAPTER    IV. 

PARTIES    TO    BILLS    AND    NOTES. 

Section  33.  Infants. 

34.  Lunatics. 

35.  Drunkards  and  spendthrifts. 

36.  Married  women. 

37.  The  bankrupt  or  insolvent  payee. 

38.  Alien  enemies. 

39.  Bill  or  note  executed  by  agent. 

40.  Form  of  signature  by  agent. 

41.  Partners. 

42.  Form  of  the  firm's  signature. 

43.  Private  corporations. 

44.  Form  of  signature  by  agents  of  corporations, 

45.  Commercial  paper  of  corporations  under  seal, 

46.  Drafts    or    warrants  of  one  officer  of  the  corporation  on 

another. 

47.  Governments. 

48.  Municipal  or  public  corporations. 

49.  Fiduciary  parlies  and  personal  representatives. 

vi 


TABLE   OF   CONTENTS. 


CHAPTER    V. 

THE    CONSIDERATION     AS     IT      AFFECTS      BONA      FIDE    OWNER- 
SHIP. 

Section  60.  Necessity  of    consideration  —  What  instruments  import  a 
consideration. 

51.  Between  whom  question  of  consideration  may  be  raised  — 

Bona  fide  holders. 

52.  Real  and  apparent  relation  of  parties. 

53.  One  consideration  supporting  the  obligations  of  more  than 

one. 

54.  Accommodation  paper. 

55.  Money  consideration  —  Contemporary    loans,    future    ad- 

vances and  existing  debts. 
66.  When  is  a  pledgee  a  bona  fide  holder  for  value. 


CHAPTER     VI. 

ACCEPTANCE    AND    AGREEMENTS  TO    ACCEPT    BILLS    AND    CER- 
TIFICATION   OF    NOTES. 

Section  57.  The  object  and  effect  of  acceptance. 

58.  When  and  in  what  cases  must  presentment  for  acceptance 

be  made  —  Effect  of  failure. 
69.  Presentment  by  whom  and  to  whom. 

60.  Where  and  at  what  time  must  presentment  be  made. 

61.  Form  and  manner  of  presentment. 

62.  When  presentment  is  waived. 

63.  Who  may  accept. 

64.  Acceptance  before  and  after  completion  of  the  bill. 

65.  Revocation  of  acceptance. 

66.  Acceptances  when  required  to  be  in  writing. 

67.  Form  and  phraseology  of  acceptance. 

68.  Implied  acceptances  —  Detention  or  destruction  of  bill, 

69.  Agreements  to  accept. 

70.  Conditional  acceptances. 

71.  Acceptances  for  honor  or  supra  protest. 

72.  What  acceptance  admits. 

73.  Certified  notes. 

vii 


TABLE   OF   CONTENTS. 


CHAPTER     VII. 

THE    TRANSFER    OF    BILLS   AND   NOTES    BY    DELIVERY    AND    IN 

GENERAL. 

Section  74.  The  assignability  of  choses  in  action  in  general  — Non-nego- 
tiable paper. 

75.  Transfer  of  negotiable  bills  and  notes  payable  to  bearer. 

76.  Liability  of  assignors  of  bills  and  notes  payable  to  bearer. 

77.  Liability  of  broker  in  transfer  of  paper  by  delivery. 

78.  Transfer  by  delivery  of  paper  payable  to  order. 

79.  Sale  of  bill  or  note  vpithout  delivery. 

80.  Implied  transfer  of  bills  and  notes. 

81.  Transfer  by  legal  process  —  Attachment,  garnishment,  exe- 

cution. 

82.  Transfer  donatio  mortis  causa. 


CHAPTER    VIII. 

TRANSFER    BY    INDORSEMENT. 

Section  83.  The  meaning,  purpose  and  effect  of  indorsement. 

84.  Liability  of  an  indorser. 

85.  Liability  of  indorser  "  without  recourse." 

86.  Successive  indorsements  —  Liability  for  contribution  and 

exoneration. 

87.  The  place  for  indorsement  —  Allonge. 

88.  Form  of  the  indorsement. 

89.  Indorsements  in  full  and  in  blank. 

90.  Absolute,  conditional  and  restrictive  indorsements. 

91.  Time  and  place  of  indorsement. 

92.  Irregular  indorsements  —  Joint  makers,  grantors,  indorsers. 


CHAPTER    IX. 

THE    RIGHTS    OF    BONA    FIDE    HOLDERS. 

Section    93.  Who  is  a  bona  Me  holder. 

94.  What  defenses  -will  and  will  not  prevail  against  bona  fide 

holders  —  General  statement. 

95.  Instruments  void  for  want  of  delivery. 
viii 


TABLE   OF   CONTENTS. 

Section    96.  Blank  instruments  delivered  to  agent  and  filled  up  in  viola- 
tion of  instructions. 

97.  Bill  or  note  written  over  a  blank  signature. 

98.  Bills  or  notes  executed  by  mistake  or  under  false  repre- 

sentations. 

99.  Bills  and  notes  executed  under  duress. 

100.  Estoppel  as  affecting  defenses  against  bona  fide  holders 

101.  What  is  meant  by  bona  fide. 

102.  Bona  fide  holder  must  be  a  holder  for  value. 

103.  When  inadequacy  of  price  constructive  notice  of  fraud. 

104.  Inadequacy  of  price  for  indorsement  as  affected  by  laws 

against  usury. 

105.  Inadequacy  of  price,  as  affecting  amount  which  may  be 

recovered  of  primary  obligor  and  indorser. 

106.  Usual  course  of  business. 

107.  Transfer  before  and  after  maturity. 

108.  Paper  payable  on  demand  or  at  sight  when  overdue. 

109.  Transfer  after  default  in  the  payment  of  installment  of 

principal  or  interest. 

110.  Transfer  on  last  day  of  grace,  or  day  of  maturity. 

111.  Actual  and  constructive  notice  of  defenses. 

112.  Notice  by  Zis  pendens. 

113.  Burden  of  proof  as  to  bona  fide  ownership. 


CHAPTER     X. 

PRESENTMENT    FOR    PAYMENT. 

Section  114.  For  what  purpose,  and  as  to  whom  is  presentment   for 
payment  necessary. 

115.  By  whom  must  presentment  be  made. 

116.  Possession  as  evidence  of  right  to  present  for  payment. 

117.  To  whom  should  presentment  be  made. 

118.  The  place  of  presentment. 

119.  The  time  of  presentment  —  Days  of  grace. 

120.  Computation  of  time  —  Legal  holidays. 

121.  The  hour  of  the  day  for  presentment. 

122.  Mode  of  presentment. 


CHAPTER     XI. 

PROTEST. 

Section  123.  The  object  and  necessity  of  protest. 
124.  By  whom  protest  should  be  made. 

ix 


TABLE    OF    CONTENTS. 

Section  125.  Place  of  protest. 

126.  By  whom  should    presentment  be   made  in    preparation 

for  protest. 

127.  Noting  dishonor  and  extending  protest. 

128.  Contents  of  certificate  of  protest  —  Proper  time  for  the 

same. 

129.  Protest,  evidence  of  what—  When  evidence  of  notice. 


CHAPTER     XII. 

NOTICE    OF    DISHONOR. 

Section  130.  Necessity  of  notice. 

131.  Who  may  give  the  notice. 

132.  To  whom  notice  should  be  given. 

133.  The  time  allowed  for  giving  notice. 

134.  Manner  of  giving  notice,  when  important. 

135.  Manner  of  giving  notice  where  parties  to  be  notified  reside 

in  the  same  place. 

136.  Personal  notice,  how  and  when  served. 

137.  Manner  of  serving  notice  on  persons  residing  elsewhere. 

138.  What  is  meant  by  "  residing  in  the  same  place." 

139.  Form  and  requisites  of  the  notice  of  dishonor. 

140.  Allegation  and  proof  of  notice. 


CHAPTER     XIII. 

EXCUSES     FOR      FAILURE      OF      PRESENTMENT,     PROTEST     AND 

NOTICE. 

Section  141.  War,  political  and  social  disturbances,   pestilence,   epi- 
demics, conflagrations,  floods,  etc. 

142.  Drawing  with  no  right  to  expect  acceptance  or  payment. 

143.  Void  note. 

144.  Ignorance  of  and  failure  to  discover  the  address  of  par- 

ties. 

145.  Sickness,  death  or  accident  to  holder  or  to  paper. 

146.  Possession  of  security  by  drawer  or  indorser. 

147.  Waiver  of  presentment,  protest  and  notice. 

148.  No  damage  to  holder  —  Loss  or  destruction  of  the  instru- 

ment. 
X 


TABLE   OF   CONTENTS. 

CHAPTER    XIV. 

FORGERY   AND   ALTERATION    OF    BILLS    AND    NOTES. 

Section  149.  Forgery  defined  and  explained. 

150.  Forgery,  alteration  and  spoliation  distinguished. 

151.  The  effect  of  authorized  alterations. 

152.  Presumption  as  to  time  of  alteration  and  burden  of  proof. 

153.  What  are  material  alterations. 
164.  What  are  immaterial  alterations. 

155.  Rights  of  bona  fide  holder  of  forged  or  altered  bill  or  note, 

156.  Recovery  of  money  paid  on  a  forged  bill  or  note. 


CHAPTER    XV. 

THE    RIGHTS     AND    LIABILITIES    OF     SURETIES     AND    GUARAN- 
TORS. 

Section  157.  Sureties  and  guarantors  distinguished. 

158.  Form  and  requisites  of  a  guaranty. 

159.  Guaranty  as  appurtenant  to  a  bill  or  note. 

160.  Demand  of  principal  debtor  and  notice  of  default,  when 

necessary. 

161.  Concealed  sureties  as  accommodation  parties  —  Nature  of 

their  liability  —  Admissibility  of  parol  evidence  to  prove 
real  character. 

162.  What  will  discharge  guarantors  and  sureties  —  Surrender 

of  securities  and  extension  of  time  of  payment. 

163.  Remedies  of  surety  and  guarantor  —  Contribution  between 

co-sureties. 


CHAPTER    XVI. 

CHECKS. 

Section  164.  Check  distinguished  from  a  bill  of  exchange. 

165.  Checks  are  drawn  on  a  bank  or  banker. 

166.  Check  payable  on  demand  and  without  grace. 

167.  The  form  and  formalities  of  the  check. 

168.  Certification  of  checks. 

169.  Negotiation  and  transfer  of  checks. 

170.  Memorandum  checks. 

xi 


TABLE   OF    CONTENTS. 

Section  171.  Presentment,  notice  and  protest  of  checks. 

172.  "Within  what  time  must  check  be  presented. 

173.  Presentment  of  check  by  mail  and  by  deposit. 

174.  What  will  excuse  failure  or  delay  in  demand  and  notice. 

175.  When  is  a  check  stale  or  overdue. 

176.  Effect  of  death  of  drawer. 

177.  Bight  of  checkholder  to  sue  the  bank. 


CHAPTER    XVII. 

PAYMENT   OF    AND   BY    BILLS,  NOTES    AND    CHECKS. 

Section  178.  Payment  distinguished  from  sale  or  transfer. 

179.  Payment  by  whom. 

180.  Payment  to  whom. 

181.  Conditions   of   payment  —  Legal   tender  —  Surrender   of 

paper  —  Receipt. 

182.  Payment  by  bill  or  note  —  Presumption  as  to  its  absolute 

or  conditional  character. 

183.  Payment  by  check. 


APPENDIX. 


THE  NEGOTIABLE  INSTRUMENTS  LAW 

OF    NEW    YORK,     CONNECTICUT,     COLORADO    AND    FLORIDA, 

MARYLAND,    VIRGINIA,    AND    THE    DISTRICT 

OF  COLUMBIA. 


Article  I.  General  provisions.     (§§  1-17.) 

II.  Form  and  interpretation  of  negotiable  instruments.     (§§  22- 
42.) 

III.  Consideration.     (§§  50-55.) 

IV.  Negotiation.     (§§  60-80.) 

V.  Rights  of  holder.     (§§  90-98.) 
VI.  Liabilities  of  parties.     (§§  110-119.) 
VII.  Presentment  for  payment.     (§§  130-148.) 
VIII.  Notice  of  dishonor,     (§§  160-189.) 
IX.  Discharge  of  negotiable  instruments.     (§§  200-206.) 

xii 


TABLE    OF    CONTENTS. 

Article     X.  Bills  of  exchange;  form  and  interpretation.     (§§210-216). 
XI.  Acceptance.     (,§§  220-230.) 
XII.  Presentment  for  acceptance.     (§§240-248.) 

XIII.  Protest.      (§§  260-268.) 

XIV.  Acceptance  for  honor.     (§§  280-290.) 
XV.  Payment  for  honor.     (§§  300-306.) 

XVI.  Bills  in  a  set.     (§§310-315.) 
XVII.  Promissory  notes  and  checks.     (§§  320-325.) 
XVIII.  Notes  given  for  a  patent  right  and  for  a  speculative  con- 
sideration.    (§§  330-832.) 
XIX.  Laws  repealed,  when  to  take  effect.     (§§340-341.) 


ARTICLE  I. 

GENERAL   PROVISIONS. 

Section    1.  Short  title. 

2.  Definitions  and  meaning  of  terms. 

3.  Persons  primarily  liable  on  instrument. 

4.  Reasonable  time;  what  constitutes. 

5.  Time  how  computed;  when  last  day  falls  on  holiday. 

6.  Application  of  chapter. 

7.  Rule  of  law  merchant ;  when  governs. 


ARTICLE   II. 

FORM   AND    INTERPRETATION. 

Section  20.  Form  of  negotiable  instrument. 

21.  Certainty  as  to  sum;  what  constitutes. 

22.  When  promise  is  unconditional. 

23.  Determinable  future  time;  what  constitutes. 

24.  Additional  provisions  not  affecting  negotiability. 

25.  Omissions;  seal;  particular  money. 

26.  When  payable  on  demand. 

27.  When  payable  to  order. 

28.  When  payable  to  bearer. 

29.  Terms  when  sufficient. 

30.  Date,  presumption  as  to. 
31C  Ante-dated  and  post-dated. 

32.  When  date  may  be  inserted. 

33.  Blanks,  when  may  be  filled. 

34.  Incomplete  instrument  not  delivered. 

35.  Delivery;  when  effectual ;  when  presumed. 

36.  Construction  where  instrument  is  ambiguous. 

xiii 


TABLE    OF    CONTENTS. 

Section  37.  Liability  of  persons  signing  in  trade  or  assumed  name. 

38.  Signature  by  agent;  authority;  how  shown. 

39.  Liability  of  person  signing  as  agent,  et  cetera. 

40.  Signature  by  procuration;  effect  of. 

41.  Effect  of  indorsement  by  infant  or  corporation. 

42.  Forged  signature;  effect  of . 


ARTICLE   III. 

CONSIDERATION    OF    NEGOTIABLE    INSTRUMENTS. 

Section  50.  Presumption  of  consideration. 

51.  What  constitutes  consideration. 

52.  What  constitutes  holder  for  value. 

53.  When  lien  on  instrument  constitutes  holder  for  value. 

54.  Effect  of  want  of  consideration. 

55.  Liability  of  accommodation  party. 


ARTICLE  IV. 

NEGOTIATION. 

Section  60.  What  constitutes  negotiation. 

61.  Indorsement;  how  made. 

62.  Indorsement  must  be  of  entire  instrument. 

63.  Kinds  of  indorsement. 

64.  Special  indorsement;  indorsement  in  blanlj. 

65.  Blanli  indorsement;  how  changed  to  special  indorsement. 

66.  When  indorsement  restrictive. 

67.  Effect  of  restrictive  indorsement;  rights  of  indorsee. 

68.  Qualified  indorsement. 

69.  Conditional  indorsement. 

70.  Indorsement  of  instrument  payable  to  bearer. 

71.  Indorsement  where  payable  to  two  or  more  persons. 

72.  Effect  of  instrument  drawn   or   indorsed   to  a  person  as 

cashier. 

73.  Indorsement  where  name  is  misspelled,  et  cetera. 

74.  Indorsement  in  representative  capacity. 

75.  Time  of  indorsement;  presumption. 

76.  Place  of  indorsement;  presumption. 

77.  Continuation  of  negotiable  character. 

78.  Striking  out  indorsement. 

79.  Transfer  without  indorsement;  effect  of. 

80.  When  prior  party  may  negotiate  instrument, 
xiv 


TABLE    OF    CONTENTS. 

ARTICLE  V. 

RIGHTS    OF   HOLDERS. 

Section  90.  Rights  of  holder  to  sue;  payment. 

91.  What  constitutes  a  holder  in  due  course. 

92.  When  person  not  deemed  holder  in  due  course. 

93.  Notice  before  full  amount  paid. 

94.  When  title  defective. 

95.  What  constitutes  notice  of  defect. 

96.  Rights  of  holder  in  due  course. 

97.  When  subject  to  original  defenses. 

98.  Who  deemed  holder  iu  due  course. 


ARTICLE   VI. 

LIABILITIES    OF  PARTIES. 

Section  110.  Liability  of  malter. 

111.  Liability  of  drawer. 

112.  Liability  of  acceptor. 

113.  When  person  deemed  indorser. 

114.  Liability  of  irregular  indorser. 

115.  AVarranty;  where  negotiation  by  delivery,  et  cetera. 

116.  Liability  of  general  indorsers. 

117.  Liability  of  indorser  where  paper  negotiable  by  delivery. 

118.  Order  in  which  indorsers  are  liable. 

119.  Liability  of  agent  or  broker. 


ARTICLE   VII. 

PRESENTMENT    FOR    PAYMENT. 

Section  130.  Effect  of  want  of  demand  on  principal  debtor. 

131.  Presentment  where  instrument  is  not  payable  on  demand 

132.  What  constitutes  a  sufficieut  presentment. 

133.  Place  of  presentment. 

134.  Instrument  must  be  exhibited. 

135.  Presentment  where  instrument  payable  at  bank. 

136.  Presentment  where  principal  debtor  is  dead. 

137.  Presentment  to  persons  linble  as  partners. 

138.  Presentment  to  joint  debtors. 

XV 


TABLE    OF    CONTENTS. 

Section  139.  When  presentment  not  required  to  charge  the  drawer. 

140.  When  presenlment  not  required  to  charge  the  indorser. 

141.  When  delay  in  making  presentment  is  excused. 

142.  When  presentment  may  be  dispensed  with. 

143.  When  instrument  dishonored  by  non-payment. 

144.  Liability  of  person  secondarily  liable,  when  instrument 

dishonored. 

145.  Time  of  maturity. 

146.  Time;  how  computed. 

147.  Rule  where  instrument  payable  at  bank. 

148.  What  constitutes  payment  in  due  course. 


ARTICLE   VIII. 

NOTICE    OF    DISHONOR. 

Section  160.  To  whom  notice  of  dishonor  must  be  given. 

161.  By  whom  given. 

162.  Notice  given  by  agent. 

163.  Effect  of  notice  given  on  behalf  of  holder. 

164.  Effect  where  notice  is  given  by  party  entitled  thereto. 

165.  When  agent  may  give  notice. 

166.  When  notie  sufficient. 

167.  Form  of  notice. 

168.  To  whom  notice  may  be  given. 

169.  Notice  where  party  is  dead. 

170.  Notice  to  partners. 

171.  Notice  to  persons  jointly  liable. 

172.  Notice  to  bankrupt. 

173.  Time  within  which  notice  must  be  given. 

174.  Where  parties  reside  in  same  place. 

175.  Where  parties  reside  in  different  places. 

176.  When  sender  deemed  to  have  given  due  notice. 

177.  Deposit  in  post-oflice,  what  constitutes. 

178.  Notice  to  subsequent  parties,  time  of. 

179.  When  notice  must  be  sent. 

180.  Waiver  of  notice. 

181.  Whom  affected  by  waiver. 

182.  Waiver  of  protest. 

183.  When  notice  dispensed  with. 

184.  Delay  in  giving  notice;  how  excused. 

185.  When  notice  need  not  be  given  to  drawer. 

186.  When  notice  need  not  be  given  to  indorser. 

187.  Notice  of  non-payment  where  acceptance  refused. 

188.  Effect  of  omission  to  give  notice  of  non-acceptance. 

189.  When  protest  need  not  be  made;  when  must  be  made. 

xvi 


TABLE    OF    CONTENTS. 


ARTICLE    IX. 

DISCHARGE    OF    NEGOTIABLE    INSTRUMENTS. 

Section  200.  Instrument;  how  discharged. 

201.  When  persons  secondarily  liable  on,  discharged. 

202.  Right  of  party  who  discharged  instrument. 

203.  Renunciation  by  holder. 

204.  Cancellation;  unintentional;  burden  of  proof. 

205.  Alteration  of  instrument;  effect  of. 

206.  What  constitutes  a  material  alteration. 


ARTICLE    X. 

BILLS    OF    EXCHANGE  ;    FORM    AND    INTERPRETATION. 

Section  210.  Bills  of  exchange  defined. 

211.  Bill  not  an  assignment  of  funds  in  hands  of  drawee. 

212.  Bill  addressed  to  more  than  one  drawee. 

213.  Inland  and  foreign  bills  of  exchange. 

214.  When  bill  may  be  treated  as  promissory  note. 

215.  Referee  in  case  of  need. 


ARTICLE    XI. 

ACCEPTANCE    OF    BILLS    OF    EXCHANGE. 

Section  220.  Acceptance,  how  made,  et  cetera. 

221.  Holder  entitled  to  acceptance  on  face  of  bill. 

222.  Acceptance  by  separate  instrument. 

223.  Promise  to  accept;  when  equivalent  to  acceptance. 
224:.  Time  allowed  drawee  to  accept. 

225.  Liability  of  drawee  retaining  or  destroying  bill. 

226.  Acceptance  of  incomplete  bill. 

227.  Kinds  of  acceptances. 

228.  What  constitutes  a  general  acceptance. 

229.  Qualified  acceptance. 

230.  Rights  of  parties  as  to  qualified  acceptance. 

b  xvii 


TABLE  OF  CONTENTS. 

ARTICLE  XII. 

PRESENTMENT     OF     BILLS     OF     EXCHANGE    FOR    ACCEPTANCE. 

Section  240.  "When  presentment  for  acceptance  must  be  made. 

24:L  When  failure  to  present  releases  drawer  and  indorser. 

242.  Presentment;  how  made. 

243.  On  what  days  presentment  may  be  made. 

244.  Presentment;  where  time  is  insufficient. 

245.  When  presentment  is  excused. 

246.  When  dishonored  by  non-acceptance. 

247.  Duty  of  holder  where  bill  not  accepted. 

248.  Rights  of  holder  where  bill  not  accepted. 

ARTICLE    XIII. 

PROTEST    OF    BILLS    OF    EXCHANGE. 

Section  260.  In  what  cases  protest  necessary. 

261.  Protest;  how  made. 

262.  Protest;  by  whom  made. 

263.  Protest;  when  to  be  made. 

264.  Protest;  where  made. 

265.  Protest  both  for  non-acceptance  and  non-payment, 

266.  Protest  before  maturity  where  acceptor  is  insolvent. 

267.  When  protest  dispensed  with. 

268.  Protest;  where  bill  is  lost,  et  cetera. 

ARTICLE  XIV. 

ACCEPTANCE    OF    BILLS    OF    EXCHANGE    FOR   HONOR. 

Section  280.  When  bill  may  be  accepted  for  honor. 

281.  Acceptance  for  honor;  how  made. 

282.  When    deemed  to  be   an    acceptance    for    honor   of    the 

drawer. 

283.  Liability  of  acceptor  for  honor. 

284.  Agreement  of  acceptor  for  honor. 

285.  Maturity  of  bill  payable  after  sight;  accepted  for  honor. 

286.  Protest  of  bill  accepted  for  honor,  et  cetera, 

287.  Presentment    for  payment  to    acceptor  for  honor;    how 

made, 

288.  When  delay  in  making  presentment  is  excused, 

289.  Dishonor  of  bill  by  acceptor  for  honor, 
xviii 


TABLE  OF  CONTENTS. 

ARTICLE  XV. 

PAYMENT    OF    BILLS    OF    EXCHANGE    FOR    HONOR. 

Section  300.  Who  may  make  payment  for  honor. 

301.  Payment  for  honor;  how  made. 

302.  Declaration  before  payment  for  honor. 

303.  Preference  of  parties  offeriDg  to  pay  for  honor. 

304.  Effect  on  subsequent  parties  where  bill  is  paid  for  honor. 

305.  Where  holder  refuses  to  receive  payment  sttpra  protest. 

306.  Rights  of  payor  for  honor. 

ARTICLE  XVI. 

BILLS    IN    A    SET. 

Section  310.  Bills  in  sets  constitute  one  bill. 

311.  Rights  of  holders  where  different  parts  are  negotiated. 

312.  Liability  of  holder  who  indorses  two  or  more  parts  of  a  set 

to  different  persons. 

313.  Acceptance  of  bills  drawn  in  sets. 

314.  Payment  by  acct  ptor  of  bills  drawn  in  sets. 
316.  Effect  of  discharging  one  of  a  set. 

ARTICLE    XVII. 

PROMISSORY    NOTES    AND    CHECKS. 

Section  320.  Promissory  note  defined. 

321.  Check  dt  fined. 

322.  Within  what  time  a  check  must  be  presented. 

323.  Certification  of  check;  effect  of. 

324.  Effect  where  holder  of  check  procures  it  to  be  certified. 

325.  When  check  operates  as  an  assignment. 


ARTICLE    XVIII. 

NOTES    GIVEN    FOR    PATENT    RIGHTS    AND  FOR    A   SPECULATIVE 
CONSIDERATION. 

Section  330.  Negotiable  instruments  given  for  patent  rights. 

331.  Negotiable  instruments  given   for  a  speculative    consid- 

eration. 

332.  How  negotiable  bonds  are  made  non-negotiable. 

xix 


TABLE    OF    CONTENTS. 


ARTICLE    XIX. 

LAWS  REPEALED ;  WHEN  TO  TAKE  EFFECT. 

Section  340.  Laws  repealed. 

341.  When  to  take  effect. 
XX 


TABLE  OF  CASES  CITED. 


References  are  to  Pages. 


Abbey  v.  Deyo,  109. 

Abbott  V.  Hendricks,  35. 

Abbott  V.  Rose,  2S3. 

Abel  V.  Alexander,  434. 

Abell  V.  Seymour,  86. 

Ackley  School  Dist.  v.  Hall,  103. 

Adalrr.  Egland,  411. 

Adams  v.  Addington,  60. 

Adams  v.  Darby,  167,  305,  383,  383. 

Adams  v.  Flanagan,  85. 

Adams  V.  Hackensack  T.  Co.,  304. 

Adams  i\  Kennedy,  98. 

Adams  v.  King,  17. 

Adams  V.  Leland,  385. 

Adams  r.  Reeves,  501. 

Adams  v.  Robinson,  271. 

Adams  v.  Seaman,  29. 

Adams  v.  Smith,  279. 

Adams  v.  Squires,  503. 

Adams  v.  Wright,  362. 

Adams  Bank  v.  Jones,  38. 

Addy  V.  Grlx,  52. 

Adkins  v.  Blake,  256. 

Aetna  Bk.  v.  Winchester,  410. 

Aetna  Nat.  Bk.  v.  Charter  Oak  Ins.  Co., 

95. 
Aetna  Xat.  Bk.  v.  Fourth  Nat.  Bk.,  47-.'. 
Agnel  V.  Ellis,  182,  183. 
Agnew  V.  Bank  of  Gettysburg,  306,307. 
Alrey  v.  Pearson,  390. 
Ala.  Coal    &    iMinlng   Co.  v.  Bralnar.l, 

16,  93. 
Alabama  Nat.  Bank.  v.  Halsey,  147. 
Alcock  V.  Alcock,  78. 
Alcock  V.  Hopkins,  504. 
Aldcn  V.  Barbour,  180. 
Aldlnc  Mfg.  Co.  V.  Warner,  359. 
Aldrlch  V.  Jackson,  198,  234,  235. 
Aldrich  V.  Stockwcll,  117. 
Aldridge  v,  Branch  Bank,  12. 
Allan  r.  Eldrcd,  171,357. 
Allen  V.  Berryhlll,433. 
Allen  r.  Briitlon,  113. 
Allen  V.  Clark,  199. 


Allen  V.  Fourth  Nat.  Bk.,  414. 

Allen  V.  Frazee,  279. 

Allen  V.  Furbush,  67. 

Allen  V.  Harroh,  426. 

Allen  V.  King,  383. 

Allen  V.  Merchants  Bk.,  339. 

Allen  V.  Pegram,  234. 

Allen  V.  Reilly,  393. 

Allen  V.  Rightmere,  431, 

Allen  V.  Suydam,  167. 

Allen  V.  Wilklns,  SO. 

Allin  V.  Williams  (in  full),  227. 

Allin  V.  Williams,  215. 

Allison  V.  Barrett,  202. 

Allison  V.  King,  202. 

Allison  V.  Kinne,  225. 

Aimer  v.  Palmer,  26, 

Almich  V.  Downey,  11. 

Alsop  V.  Todd,  70. 

Alter  V.  Berghaus,  403. 

Am.  Emigrant  Co.  v.  Clark,  465. 

Am.   Exch.  Nat.  Bk.  v.   N.  Y.  Belting 

&c.  Co.,  252. 
Am.  Exch.  Nat.  Bank  v.  Oregon  Pottery 

Co.,  95. 
Am.  Nat.  Bk.  v.  Bangs,  66,  411. 
Am.  Nat.  Bank  v.  Junk  &c.  Mfg,  Co,, 

304,  otiO,  3f.7, 
Am.  Trust  &  Sav.  Bk.  v.  Gluck,  9,5, 
Am.  Water  Works  v.  Venner,  179. 
Ames  V.  Colburn,  418. 
A:ncs  v.  Merriam,470. 
Aramldown  v.  Woodman,  316. 
Amosr.  Bennett,  604. 
Amoskeag  r.  Moore,  391. 
Anderson  a.  Drake,  169. 
Anderson  r.  Jacobson,  41. 
Anderson  v.  Rogers,  468. 
Anderson  v.  Warne,  433. 
Andressen  i-.  First  Nat.  Bank,  176, 
Andrew  r.  Blackley,  460. 
Andrews  t'.  Bank,  477. 
Andrews  v.  Germ.  Nat.  Bank,  172,  466. 
Andrews  v.  Simms,  219. 
Androscoggin  Bk.  r.  Kimball,  11,  252. 
Angaletos  v.  Meridian  Nat.  Bk.,  393. 

xxi 


TABLE    OF    CASES    CITED. 


References  are  to  Pages, 


Angle  V.  N.  W,  &c.  Ins.  Co.,  40,  252,  269, 

407,  410,  413. 
Aniba  i\  Yeomans,  219. 
Anniston  L.  &  T.  Co.  v.  Stickney,  34. 
Annville  Nat.  Bk.  v.  Kettering,  390. 
Appeal  of  Greenbaum,  311. 
Apperson  v.  Bynam,  311,  382. 
Apperson  v.  Union  Bank,  382. 
Apple  V.  Lesser,  372. 
Appleton  V.  Donaldson,  15L 
Appleton  V.  Parker,  504. 
Appleton  V.  Sweetapple,  481. 
Archibald  v.  Argall,  502. 
Arents  v.  Commonwealth,  426. 
Armstead  v.  Arm  stead,  820. 
Armstrong  v.  Gibson,  259. 
Armstrong  v.  Harshman,  224. 
Armstrong  v.  Lewis,  39.3. 
Armstrong  v.  Pomeroy  Nat.  Bank 

(in  full),  46. 
Armstrong  v.  Pomeroy  Nat.  Bank,  19. 
Arnold  V.  Dresser,  310,  318. 
Arnold  v.  Kinlock,  342. 
Arnold  v.  Sprague,  176. 
Arnot  V.  Woodburn,  264. 
Arnott  V.  Symonds,  218. 
Arpln  V.  Chapin,  191. 
Ashbrook  v.  Ryon,  204. 
Ashe  V.  Bcasley,  338,  339,  358. 
Ashley  V.  Gunton,  365. 
Asplnwall  v.  Wake,  183. 
Atkins  V.  Cobb,  222. 
Atkinson  v.  Brooks,  154. 
Atkinson  v.  Hawden,  407. 
Atkinson  v.  Manks,  144, 180. 
Atlantic  Bk.  v.  Merchants'  Bk.,  463,  464. 
Atlantic  Nat.  Bank  v.  N.  W.  Fertilizing 

Co.,  179. 
Atlantic  Nat.  Bk.  v.  Franklin,  154. 
Atlantic  State  Bank  v.  Savery,  91,  92. 
Atlas  Bank  v.  Doyle,  151. 
Atlas  Nat.  Bank  v.  Holm,  270. 
Attenborough  v.  McKenzie,  166. 
Atty.-General  v.  Cont.  L.  Ins.  Co.,  472. 
Atty.-Gen.  v.  Life  &  Fire  Ins.  Co.,  94. 
Atwood  V.  Cornwall.  500. 
Atwood  V.  Mannings,  174. 
Auerbach  v.  Le  Sueur  Mill  Co.,  95. 
Auerbach  v.  Prltchett,  30. 
Anltman  &  Taylor  Co.  v.  Hefner,  433. 
Austin  V.  Boyd,  148,  150. 
Auten  V.  Gruner,  254,  258. 
Avent  v.  Maroney,  3S2. 
Averett's  Adm'x  v.  Booker,  27, 144. 
Avery  v.  Latimer,  197. 
Avery  v.  Stewart,  315. 
Ayers  v.  Burns,  77. 
Aymar  v.  Beers,  167,  387,  479. 
Ayrault  v.  Bank,  355. 

xxii 


B 


Babcockv.  Beman,  140. 

B;ibcock  v.  Blanchard,  513. 

Bacchus  V.  Richmond,  182. 

Bachcllor  v.  Priest,  1G6,  306,  307,  358,  499. 

Backus  V.  Danforth,  196. 

Backus  V.  Shepherd,  390. 

Bacon  v.  Bicknell,  23. 

Bacon  v.  Dyer,  304. 

Bacon  v.  Fitch,  17. 

Bacon  v.  Hanna,  366. 

Bacon  v.  Page,  24. 

Bacon's  Adm'r  v  Bacon's  Trustee,  266. 

Bailey  v.  Bank  of  Missouri,  365. 

Bailey  v.  Carswell,  85. 

Bailey  v  Dozler,  339,  341. 

Bailey  V.  Freeman,  428. 

Bailey  v.  Malvin,  497. 

Bai:ey  v.  Smith,  258,  261. 

Bailey  v.  Smoek,  34. 

Bailey  v.  Southwestern  Bk.,384. 

Bailey  v.  Taylor,  408,  409. 

Baker  r.  Dening,  62. 

Baker  w.  Guarantee  T.  &  S.  D.  Co.,  269. 

Bailey  v.  Stoneman,  238. 

Baker  v.  Robinson,  226,  359. 

Baker  v.  Scott,  390. 

Balch  V.  Onion,  223. 

Baldwin  v.  Bank  of  Newbury,  86. 

Baldwin  v.  Dow,  429. 

Baldwin  v.  Richardson,  386. 

Baldwin  v.  Rosier,  76. 

Baldwin  v.  Threlkeld,  415. 

Baldwin  v.  Van  Deusen,  199. 

Ball  V.  Allen,  405. 

Ballard  v.  Franklin  Ins.  Co.,  407,  408. 

Balllnger  v.  Edwards,  259. 

Ballon  V.  Talbot,  87. 

Ballston    Spa    Bank   v.  Marine    Bank, 

86,  97. 
Bancroft  v.  Haines,  36. 
Bane  v.  Gridley,  69. 
Bangs  V.  Hornick,  146. 
Bankhead  v.  Owen,  199. 
Bank  v.  Adams,  404. 
Bank  v.  Armstrong,  242. 
Bank  v.  Ashworth,  405. 
Bank  v.  Barksdale.  328,  356. 
Bank  v.  Bressc,  60. 
Bank  v.  Barton,  350. 
Bank  v.  Cornhauser,  477. 
Bank  V.  Davis,  124,  487. 
Bank  v.  Doyle,  300. 
Bank  v.  Dunbar,  42. 
Bank  v.  Ellis,  60,  220. 
Bank  v.  Fairbrother,  373. 
Bank  V.  Frame,  442. 
Bank  v.  Glllet,  126. 


TABLE    OF    CASES    CITED. 


References 

Bank  v.  Hollister,  350. 

Bank  v.  Habbell,  243. 

Bank  v.  Ilunt,  336,  347,  349,  350. 

Bank  i-.  Hyde,  54. 

Bank  v.  Jones,  254,  477,  495, 611. 

Bank  V.  Leach,  477. 

Bank  V.  Leonard,  140. 

Bank  v.  McAllister,  316. 

Bank  v.  McMlchael,  355. 

Bank  v.  Matthews,  512, 

Bank  v.  Miller,  477. 

Bank  v.  Norton,  124. 

Bankt'.  Payne,  124. 

Bank  v.  Railroad  Co.,  293,  294. 

Bank  v.  Raymond,  291. 

Bank  v.  Rotge,  477. 

Bankr.  Smith,  347. 

Bank  v.  Taylor,  291,  293. 

Bank  v.  Topping,  138, 141. 

Bank  v.  Wager,  416. 

Bank  v.  Weiss,  243. 

Bank  V.  Whitman,  477. 

Bank  v.  Whitney,  512. 

Bank  v.  Wlllard,  335. 

Bank  v.  Winchester,  117. 

Banking  Co.  v.  Lewis,  299. 

Bank  of  Alexandria  v.  Swan,  362,  370. 

Bank  of  America  v.  Senior,  205,  220. 

Bank  of  America  v.  Shaw,  373,  404. 

Bank  of  Antif^o  v.  Union  Trust  Co. 

(In  fall),  490. 
Bank  of  Antigo  v.  Union  Trust  Co.,  472. 
Bank  of  British  N.  A.  r.  Merchants  ><at. 

Bk.,  422. 
Bank  of  Capo  Fear  v.  Seawell,  371. 
Bank  of  Chenango  v.  Root,  360. 
Bank  of  Chlllicothe  v.  Mayor  of  Chilli- 

cothe,  102. 
Bank  of  Clarke  Co.  v.  Oilman,  221. 
Bank  of  Columbia  v.  Lawrence,  365,  366, 

367,  369. 
Bank  of  Columbia  v.  Magruder,  368. 
Bank  of  Columbia  v.  Patterson,  99. 
Bank  of  Com.  v.  Carey,  174. 
Bank  of  Com.  v.  I^etcher,  503. 
Bank  of  Commerce  v.  Chambers,  364. 
Bank  of  Commerce  v.  Union  Bank,  410. 
Bank  of  Commerce  v.  Wright,  153,  154. 
Bank  of  (Commonwealth  v.  Mudgett,  313. 
Bank  of  Deer  Lodge  v.  Hope  Min.  Co., 

86. 
Bank  of  Genesee  v.  Patchin  Bank,  87, 95, 

123,  412. 
Bank  of  Geneva  v.  Hewlett,  367. 
Bank  of  Hamburg  v.  Johnson,  84. 
Bank  of  Kansas  City  v.  Mills,  308. 
Bank  of  Ky.  v.  Garey,  341. 
Bank  of  Ky.  v.  Purslcy,  343. 
Bank  of  Lassen  Co.  v.  Sberer,  13, 197. 


are  to  Pages. 

Bank  of  Louisville  v.  Riley,  174. 
Bank  of  Manchester  v.  Slason,  343. 
Bank  of  Michigan  v.  Ely,  179. 
Bank  of  Missouri  v.  Vaughn,  358,  359. 
Bank  of  Montgomery  v.  Walker,  432. 
Bank  of  New  York  v.  Vanderhorst,  151. 
Bank  of  X.  O.  v.  Whittemore,  312. 
Bank  of  Ohio  Valley  v.  Lockwood,  145, 

408,  411. 
Bank  of  Old  Dominion  v.  McVeigh,  369. 
Bank  of  Pittsburg  v.  Neal,  40,  172,  251, 

257. 
Bank  of  Port  Jervls  v.  Darling,  226,  361. 
Bank  of  Red  Oak  v.  Orvis,  310. 
Bank  of  Republic  v.  Baxter,  463. 
Bank  of  the  Republic  v.  Millard,  472. 
Bank  of  Rochester  v.  Gray,  343,  344. 
Bank  of  Rochester  v.  Monteath,  93. 
Bank  of  Rome  v.  Rome,  256. 
Bank  of  Rutland  v.  Woodruff,  177. 
Bank  of  Sherman  v.  Apperson,  21, 
Bank  of  State  of  S.  C.  v.  Herbert,  85. 
Bank  of  Syracuse  v.  Hollister,  317. 
Bank  of  Topeka  v.  Kelson,  252. 
Bank  of  Troy  v.  Topping,  106. 
Bank  of  University  v.  Tuck,  501. 
Bank  of  U.  S.  v.  Beirne,  216. 
Bank  of  U.  S.  v.  Corneal,  371. 
Bank  of  U.  S.  v.  Corcoran,  363,  365. 
Bank  of  U.  S.  v.  Dandrldge,  99. 
Bank  of  U.  S.  v.  Daniel,  502. 
Bank  of  U.  S.  v.  Hatch,  365,  426. 
Bank  of  U.  S.  v.  Norwood,  369. 
Bank  of  U.  S.  v.  Sill,  303. 
Bank  of  U.  S.  v.  Smith,  34,  303,  305,  312. 
Bank  of  U.  S.  r.  United  States,  308,  499. 
Bank  of  Utlca  v.  Smith,  168,  300,  308,  499. 
Bank  of  Van  Diemen's  Land  v.  Bank  of 

Victoria,  193. 
Bank  of  Washington  v.  Reynolds,  309. 
Bank  of  Washington  v.  Triplett,  166, 167, 

314,  339. 
Bank  of  West  Tennessee  v.  Davis,  365. 
Bank  of  Winona  f.  Wofford,  197. 
Barbaroud  v.  Waters,  383. 
Barclay  r.  Bailey,  336. 
Barclay  v.  Weaver,  389,  391. 
Barden  v.  Southerland,  36. 
Baring  r.  Clark,  182,  501. 
Barker  v.  Llchtenberger,  264. 
Barker  v.  Scudder,  429. 
Barker  v.  Valentine,  264. 
Barlow  r.  Gregory,  316. 
Barlow  v.  Meyers,  429. 
Barnard  r.  Backhaus,  146. 
Barnard  v.  Goslln,  226. 
Barnes  v.  Ontario  Bank,  86. 
Barnes  r.  Reynolds,  361. 
Barnes  v.  Vaughan,  318. 

xxiii 


TABLE    OF    CASES    CITED. 


References 

Barnct  v.  Smith,  177,  463,  50-1. 

Barney  v.  Newcomb,  179. 

Barough  v.  White,  304. 

Barrett  V.  Allen,  316. 

Barrett  v.  Davis,  434. 

Barrett  v.  nodge  (in  full),  112. 

Barrett  V.  Evans,  369. 

Barrington  v.  Bk.  of  Washington,  410. 

Barron  v.  Cody,  432. 

Barrovr  v.  Blspham,  36. 

Bartlett  v.  Uawley,  88,  362. 

Bartlctt  V.  Leathers,  316. 

Bartlett  w.  Robinson,  368. 

Bartlett  v.  Tucker,  13,  87, 136. 

Barton  v.  Bank,  59,  61. 

Baskin  v.  Crews,  390. 

Basa  V.  O'Brien,  88. 

Bassenhorst  r.  WUby,  237,  305,  393. 

Bassett  v.  Avery,  2G4. 

Batemau  v.  Mid.  Wales  Ry.  Co.,  94. 

Bates  V.  Iron  Co.,  116. 

Battle  V.  Weems,  264. 

Battles  V.  Loudenslager,  274. 

Banghn  v.  Shackleford,  105. 

Banmgardner  v.  Reeves,  347,  348, 

Baxter  v.  Duren,  199. 

Baxter  v.  Little,  222,  264. 

Bay  V.  Mitchell,  338. 

Bay  V.  Sbradcr,  67, 410. 

Bayard  v.  Shank,  198. 

Bay  City  Bank  v.  L.indsay  (in  full) 

505. 
Bay  City  Bk.  v.  Lindsay,  503. 
Bayley  v.  Tabor,  12, 146. 
Bayliss  v.  Pearson,  265. 
Bazendalc  v.  Bennett,  251. 
B.  C.  &  N.  R.  R.  Co.  V.  Nat.  Bank  of  Re 

public,  155. 
Beal  V.  Roberts,  200. 
Beale  v.  Parrish,  359,  385. 
Beall  V.  Gen.  Elcc.  Co.  etc,  197. 
Beallsr.  Peck,  361,380. 
Beard  V.  Dcdolph,202. 
Bcardsley  v.  Cook,  183. 
Beardslcy  v.  Hill,  33. 
Beardsley  v.  Warner.  426. 
Beardsley  v.  Webber,  22. 
Beaver  v.  Slankcr,  492. 
Beauregard  v.  Knowlton,  469. 
Beckford  v.  Bank,  495. 
Beckley  v.  Munson,  435. 
Beckwlth  v.  Smith,  367. 
Beckwithv.  Webber,  435 
Beebc  v.  Brooks,  359. 
Beecher  v.  Dacry,  95,  504. 
Beeching  v.  Gower,  480. 
Belcher  V.  Smith,  429. 
Beldcn  v.  Lamb,  3SG. 
Belknap  v.  Nat.  Bk.  of  N.  A.,  407,  411. 

xxiv 


are  to  Pages. 

Bell  i:  Dagg,  199,  200. 

Bell  V.  Hagerstown  Bk.,  368. 

Bell  V.  Machine,  409. 

Bell  V.  Norwood,  498. 

Bell  V.  Simpson,  203. 

Bell  V.  Wandby.  86. 

Bellamy  v.  Majoribanks,  461. 

Bell,  Berkley  &  Co.  v.  Hall,  394. 

Bellert'.  Frost,  389. 

Belmont  Branch  Bk.  v.  Hoge,  273. 

Belton  V.  Hatch,  485. 

Benedict  v.  Cowden,  66,  411. 

Benedict  v.  Cox,  15. 

Benedict  v.  Miner,  410. 

Benedict  v.  Olson,  426,  432. 

Benedict  v.  Schmiegs,  310,  364. 

Berham  v.  Smith,  98. 

Benjamin  v.  Delahay,  410. 

Bennett  v.  Bumfltt,  14. 

Benson  v.  Abbott,  201. 

Benton  v.  Germ.  Am.  Nat.  Bk.,  151,  162, 

269. 
Benton  v.  Martin,  40, 133,  393. 
Berg  V.  Abbott,  313. 
Berkeley  v.  Tinsley,  150. 
Berkley  v.  Canon,  79. 
Berkshire  Bk.  v.  Jones,  390. 
Berry  v.  Pullen,  434. 
Berry  v.  Robinson,  305. 
Berry,  etc.,  v.  Southern  Bk. ,  394,  395. 
Best  r.Crall,  501. 
Best  V.  Hoppie,  225. 
Best  V.  Nokomis  Nat.  Bk.,  308. 
Betterton  v.  Roope,  357. 
Bevan  v.  Fitzsimmons,  215. 
Bcvcrldge  v.  Richmonds,  383. 
Bickford  v.  First  Nat.  Bk.,  466,  505,  51L 
Bickford  v.  Gibbs,  427,  439. 
Bitgler  v.  Merchants  Loan  &  T,  Co.,  271. 
Bigelow  V.  Stilphen,  407,  408. 
Big  Sandy  N.  B.  v.  Chilton,  359. 
Bilderback  i\  Burlingame,  30, 144. 
Billings  c.  Collins,  262. 
Billiugton  V.  Wagoner,  434. 
Binford  v.  Adams,  497. 
Birclebach  v.  Wilkins,  144. 
Bird  V.  Daggett,  95, 117. 
Blrdsell  v.  Rns.sell,  412. 
Birdsell  Mfg.  Co.  v.  Brown,  202. 
Bishop  V.  Rowe,  88,  426. 
Bissell  V.  Dickerson,  261. 
Bissell  V.  Gowdy,  264,  429= 
BisscU  V.  Lewis,  179. 
Bissell  V.  Morgan,  273. 
Bitter  v.  Rothman,  110. 
Black  V.  Fizor,  384. 
Black  V.  Ward,  32. 
Blackmail  v.  Lehman,  212. 
Black  Klver  lus.  Co.  v.  N.  Y.&c.  T.  Co., 40. 


TABLE    OF   CASES    CITED. 


References 

Blair  V.  Bank  of  Tennessee,  180,  412,  426. 

Blakely  v.  Grant,  211. 

Blakeslee  v.  Hewitt  (In  fall),  244. 

Blakeslee  v.  Hewitt,  224. 

Blakey  t'.  Johnson,  413. 

Blakiston  v.  Dudley,  179. 

Blanc  V.  Mut.  Nat.  Bk.,  300. 

Blanchard  v.  Williamson,  205. 

Blanckenhagen  i\  Blundcll,  18, 

Blosse  V.  Blackburn,  200. 

Block  V.  Wilkinson,  177. 

Bloomlngdalc  v.  Lisburger,  80. 

Blum  V.  Loggins,  273. 

Board  of  Education  v.  Fonda,  502. 

Board  of  Education  v.  Sinton,  498. 

Bodine  v.  Killeen,lll. 

Bodley  v.  Hlggins,  .38. 

Bogart  V.  McClung,  392. 

Bogarth  v.  Breedlove,  410. 

Bogert  V.  Hertell,  107. 

Bogyt'.  Keil,383. 

Bolt  V.  Carr,  311. 

Boiling  V.  Munchus,  438. 

Bonar  v.  Mitchell,  338. 

Bond  V.  Bragg,  338,  344. 

Bond  V.  Moore,  382. 

Bond  V.  Starrs,  501. 

Bonner  lu  City  of  New  Orleans,  362. 

Bonney  v.  Seeley,  435. 

Booth  V.  Franklin,  169. 

Booth  V.  Powers,  407, 411. 

Booth  V.  Wiley,  435. 

Boozer  v.  Anderson,  30. 

Borah  r.  Curry,  30. 

Borden  v.  Clark,  215. 

Born  V.  Bank,  477. 

Bossr.  Hewitt,  103. 

Boston  Ice  Co.  v.  Potter,  195. 

Boston  Nat.  Bk.  v.  Jose,  503. 

Botcler  v.  Dexter,  358. 

Bottomley  v.  Fisher,  122. 

Bouno  V.  Douglass,  140. 

Bourne  v.  Ward,  144. 

Bowcn  t'.  Newell,  314,  4.59,  461. 

Bowers  v.  Industrial  Bank  of  Chicago, 

8,  305. 
Bowling  V.  Harrison,  363,  364. 
Bowman  v.  Hiller,  214. 
Bowman  v.  McChesney,  265. 
Bowman  v.  Van  Kuren,  155. 
Boxberger  v.  Scott,  417. 
Boycc  V.  Edwards,  178, 179,  474. 
Boyd  V.  Bank  of  Toledo,  391. 
Boydr.  I5ell,497. 
Boyd  V.  Cleveland,  389. 
Boyd  r.  Nasmlth,  477. 
Boyd  V.  Orton,  360. 
Boycr  i\  Richardson,  221. 
Boylo  r.  Skinner,  93. 


are  to  Pages. 

Boynton  v.  Pierce,  225,  419. 

Bradford  v.  Prescott,  225. 

Bradford  v.  Williams,  196. 

Bradlee  v.  Boston  Glass  Mfg.  Co.,  98. 

Bradley  v.  Delaplaine,  460. 

Bradley  v.  Marshall,  264. 

Bradley  r.  Northern  Bk.,  309,  343. 

Bradshaw  v.  Combs,  434. 

Bradshaw  v.  Van  Valkenburg,  146. 

Brady  v.  Chandler,  23. 

Brailsford  r.  Williams,  359. 

Braithwaitc  v.  Gardner,  183. 

Branch  v.  U.  S.  Nat.  Bk.,  222. 

Brashear  v.  West,  439. 

Braxton  v.  Braxton,  248. 

Breckenridge  i\  Shrieve,  91. 

Breed  v.  Hiilhouse,  431. 

Bregler  v.  Merchants  L.  &  T.  Co.,  25. 

Breitung  v.  Lindauer,  502. 

Bremner  v.  Fields,  40. 

Brenner  w.  Gundesheimer,  148. 

Brenham  v.  Germ.  Am.  Bk.,  103. 

Brennan  v.  Vogt,  316,  344,  364. 

Brent's  Exrs.  v.  Bank,  347. 

Brewster  t\  Burnett,  415. 

Brewster  v.  Silence,  428. 

Breyfogie  v.  Beckley,  304. 

Bridge  v.  Batchelder,  199. 

Bridgeport  City  Bk  v.  Welch,  287. 

Bridges  v.  Reynolds,  500. 

Bridges  i\  Winters,  410. 

Brlggs  v.  Boyd,  436. 

Briggs  V.  Downing,  149. 

Briggs  V.  McCabe,  77. 

Brigga  v.  Partridge,  89,  123. 

Brigham  v.  Peters,  87. 

Brlgham  v.  Potter,  146. 

Brighton  Ac.  Bk.  v.  Philbrick,  386. 

Brill  V.  Tuttlc,  27. 

Brlnd  v.  Hampshire,  37. 

Brinkley  v.  Going,  308,  501. 

Brlnkman  v.  Hunter,  179. 

Bristol  V.  Warner,  26,  34,  143,  144. 

Bristol  Knife  Co.  v.  First  Nat.  Bk.,  46a 

Britt  V.  Lawson,  310. 

Britton  V.  Dicrker,  410. 

Brittouf.  Nichols,  311. 

Brock  V.  Brock,  412. 

Brockway  v.  Allen,  140. 

Bromley  v.  Hawley,  152. 

Bronson  v.  Rodcs,500. 

Brock  V.  Van  Nest,  222. 

Brockover  v.  Kslerly,  284. 

Brooks  f.  Brady,  22. 

Brooks  V.  Hay,  150. 

Brooks  f.  Hlgby,  313. 

Brooks  V.  Matthews,  254. 

Brooks  V.  Mltchel,  2()6. 

Brooks  r.  Stackpole,  224. 

XXV 


TABLE    OF    r\SES    CITKD. 


References  are  to  Pages. 


Brooks  V.  Strnther.a,  2S. 

Brothers  v.  Bank  of  Kunkana,  257. 

Brotherton  v.  Street,  219. 

Browerv.  Roppert,  382. 

Brown  v.  Ambler,  178. 

Brown  v.  Ames,  88,  216. 

Brown  v.  Bk.  of  Abingdon,  363,  369. 

Brown  v.  Boone,  199,  201. 

Brown  v.  Brown,  204. 

Brown  t.  ItaeBntcbers'  and  Drov- 
ers' Bank  (in  full),  52. 

Brown  v.  Batchers'  and   Drovers'  Bk., 
13, 14,  52,  218. 

Brown  V.  Batler,  226. 

Brown  v.  Curtis,  429,  431. 

Brown  v.  DeWinton,  438. 

Brown  v.  Donnell,  96. 

Brown  v.  Douglass,  140. 

Brown  v.  First  Nat.  Bank,  22. 

Brown  v.  Hull,  222. 

Brown  v.  Jones,  311,  370. 

Brown  t.  Jordlial  (in  fuK)  62. 

Brown  v.  Leckie,  477,  505,  511. 

Brown  v.  Lusk,  460,  468. 

Brown  v.  North,  152, 

Brown  v.  Parker,  132. 

Brown  v.  Penfleld,  260. 

Brown  v.  People,  406. 

Brown  v.  Reed,  413. 

Brown  v.  Spofford,  248,  273. 

Brown  v.  Straw,  410,  411. 

Brown  v.  Ward,  299. 

Brown  v.  Wilson,  202,  339. 

Brownell  v.  Winnie,  410. 

Browning  v.  Merritt,  225,  226. 

Bruce  v.  Purr,  199. 

Bruce  v.  Carter,  67. 

Brnsh  v.  Barrett,  469. 

Brush  V.  Reeves,  212. 

Bryantr.  Lord,  388. 

Bryant  r.  Merchants'  Bk.,  390. 

Bryant  v.  Wilcox,  391. 

Bryden  v.  Taylor,  343. 

Bryson  v.  Lucas,  87,  S8. 

Buchanan  v.  Drovers  Nat.  Bank,  147. 

Buchanan  v.  International  Bk.,  151,  261, 

Buchanan  v.  Mechanics'  Loan  &  Sav. 
Inst.,  270. 

Buchanan  v.  Mechanics'  Loan  &  Tr.  Co., 
155. 

Buchanan  v.  Wren,  26,  35. 

Baehler  v.  McCormick,  501. 
Buck  r.  Cotton,  393. 
Buckv.  Davenport,  219. 
Buck  V.  Steffey,  11. 
Buckley  v.  Briggs,94,  96,  99. 
Buckley  v.  Seymour,  341. 
Bnckner  v.  Finley,  5. 
Buckner  v.  Lee,  93. 

xxvi 


Budweiser  Brewing  Co.   v.  Cappareill, 

304. 
Bull  V.  Bank  of  Kasson,  31. 
Bull  V.  First  Nat.  Bk.,  461,  465. 
Bull  V.  Tultle,  7 
Bullard  v.  Bell,  22. 
Bullard  v.  Randall,  165,462,  476. 
Bullock  V.  Taylor,  29. 
Burapass  v.  Timnis,  37. 
Bunzel  v.  Maas,  260. 
Burbank  v.  Beach,  347. 
Burchard  v.  Frazer,  604. 
Burdick  v.  Green,  201. 
Burkam  v.  Trowbridge,  371. 
Burkholter  v.  Second  Nat.  Bk.,  465, 
Burke  v.  Allen,  78. 
Burke  i\  Bishop,  471. 
Burke  v.  Bishop  &  Risley,  204. 
Burke  v.  McKay,  338,  340. 
Burke  V.  White,  499. 
Burgess  v.  Chapin,  234. 
Burgess  v.  Vreeland,  371. 
Burgh  r.  Legge,  369. 
Burlingame  v.  Brewster,  410,  412. 
Burlingame  v.  Foster,  367. 
Burlington,  etc.,  R.R.  Co.  v.  Clay  Co.  104. 
Burn  IK  Kahn,  11. 

Burnham  v.  Merchants'  Exch.  Bank,  201. 
Burnham  v.  Merchants'  Exch.  Bk.,  262. 
Burrillr.  Smith,  214. 
Burritt  v.  Tidmarsh,  305. 
Burroughs  v.  Bunnell,  105. 
Burrows  v.  Jemino,  193. 
Burrows  v.  Keays,  201. 
Burson  v.  Huntington,  250. 
Burton  v.  Brooks,  31,  33. 
Burton  v.  Slaughter,  511. 
Burwell  i:  Orr,  407. 
Burwell  v.  Springfield,  518. 
Buscher  v.  Murray,  225. 
Bush  v.  Baldrey,  500. 
Bush  V.  Lathrop,  294. 
Bush  V.  Scribner,  287. 
Butler  r.  Gambs,  434. 
Butler  V.  Earns,  254. 
Butler  V.  Slocomb,  384. 
Buttrick  V.  Ray,  501. 
Buzzell  V.  Bennett,  77. 
Bynum  v.  Apperson,  313,  381. 
Byrd  v.  Halloway,  106. 

c 

Cabot  Bank  v.  Morton.  200,  234. 
Cabot  Bk.  V.  Warner,  363. 
Cady  V.  Bradshaw,  391. 
Cady  V.  Shepard,  217,  225,  244. 
Cage  V.  Palmer,  261. 
Cahn  V.  Duston,  226. 


TABLE    OF    CASKS    CITED. 


Calder  v.  BUlington,  291. 

Calkins  t).  Fry,  79. 

Callanan  v.  Williams,  304. 

Camden  v.  Doremus,  318. 

Camden  v.  McKay,  419, 

Camden  Safe  Dep.  Co.  v.  Abbott,  274. 

Camp  V.  Clark,  266. 

Camp  V.  Simmons,  216. 

Camp  V.  Wiggins,  390. 

Campbell  v.  Allen,  497. 

Campbell  v.  Huff,  274. 

Campbell  v.  McCormac,  143. 

Campbell  v.  Nichols,  250. 

Canadian  Bank  r.  McCrea,  504, 

Canal  Bank  v.  Bk.  of  Albany,  601. 

Cannon  v.  Canfleld,  25ri. 

Cannon  v.  Llndsey,  94. 

Capital  &c.  Ins.  Co.  v.  Quinn,  172. 

Capital  Nat.  Bk.  v.  Am.  Exch.  Nat,  Bk., 

316, 
Capital  Sav,  Bk.  &.  Trust  Co.  v.  Swan, 

270. 
Carey-Lombard  Co.  v.  First  Nat.  Bk., 

314. 
Carlon  V.  Keneally,  26. 

Carlton  v.  Buckner,  203. 

Carmody  v.  Crane,  28. 

Carnegie  v.  Morrison,  179. 

Carnwright  v.  Gray,  26, 143. 

Caroline  N.  B.  v.  Wallace,  301  30:?,  304. 

Carpenter  v.  Farnsworth,  18. 

Carpenter  v.  First  Nat.  Bk.,  254. 

Carpenter  v.  Reynolds,  391. 

Carr  v.  Bauer,  18. 

Carr  v.  Le  Fevre,  197. 

Carr  v.  Nat.  Security  Bank,  165. 

Carr  v.  Nat.  Security  Bk.,  463,  472. 

Carrier  v.  Cameron,  92. 

CarrlUov.  Mcrhlllips,  221. 

Carroll  Co.  Sav.  Bank  v.  Strother,  26,  29. 

Carruth  v.  Walker,  212. 

Carson  v  Kerr,  181. 

Carter  v.  Burlcy,  343. 

Carter  v.  McCUntock,  38. 

Carter  v.  Union  Bank,  338,  339,  368. 

Carter  V.  White,  174. 

Caruthers  v.  West,  264. 

Carver  v.  Steele,  433. 

Casco  Bk.  V.  Kcene,  414. 

Casco  Bk.  V.  Mussey,  309. 

Casco  Kat.  Bank  v.  Clark  (In  full), 
122. 

Casco  N.  B.  V.  Clark,  98.  209. 

Casco  Nat.  Bk.  v.  Shaw,  36.),  366. 

Case  V.  Bank,  116. 

Case  V.  Burt,  172. 

Case  V.  Henderson,  472. 

Cashaian  v.  Harrison,  382. 

Casou  V.  Grant  Co.  l)e\>.  Bk.,  403 


References  are  to  Pages. 

Cassel  V.  Dows,  179. 

Cassldy^'.  Creamer,  366. 

Castle  V.  Candel.  212,  266. 

Castle  V.  Rickly,  238,  384. 

Caweln  v.  Browinski,  466. 

Cayuga  Co.  Bk.  v.  Bennett,  363, 

Cayuga  Co.  Bank  v.  Hunt,  169,  170,  310 

341,362. 
Cayuga  Co.  Bk.  v.  Warden,  305. 
Cedar  Falls  Co.  v.  Wallace,  386,  393. 
Central  Bank  v.  Allen,  313. 
Central  Bk.  v.  Davis,  219,  388. 
Central  Bk.  v.  Haramett,  248,  262. 
Central  Bank  v.  Wlllard,  68. 
Central  Nat.  Bk.  v.  Adams,  386. 
Central  Nat.  Bk.  v.  Pipkin,  257. 
Central  Nat.  Bank  v.  Railroad  Co.,  36. 
Central  Sav.  Bank  v.  Richards,  177. 
Central  Trust  Co.  v.  N.  Y.  Equipment 

Co.,  22. 
Chaddock  v.  Vanness,  225. 
Chadwell's  Adm'r  v.  Chadwell,  13. 
Chadwick  v.  Eastman,  407. 
Chafoin  v.  Rich,  434. 
Chains  V.  McCram,  199,216. 
Chamberlain  v.  Hopps,  113. 
Chamberlain  v.  Pacific  Wood   &c.  Co. 

98. 
Champion  v.  Gordon,  355,  459. 
Chandler  v.  Carey,  24. 
Chandler  v.  Westfall,  226. 
Chapin  v.  Dobson,  138. 
Chapln  V.  Vt.  Ac.  R.  R.  Co.,  99. 
Chapman  v   Cottrel,  175. 
Chapman  v.  Keane,  358,  359. 
Chapman  r.  McCrea,  215. 
Chapman  v.  Rose,  214,254,  257. 
Chapman  v.  Wight,  25. 
Chappelear  v.  Martin,  499. 
Chard  v.  Fox.  371. 
Charke  v.  Dederick,  263. 
Charlotte  Steamboat  v.  Hammond,  5CiL 
Chase  v.  Redding,  204. 
Chase  Nat.  Bank  v.  Faarot,  252. 
Chatham  Bank  v.  Allison.  342. 
Chatham  Nat   Bk.  v.  Pratt,  434. 
Chautauqua  Co.  Bk.  v.  Davis,  220,  308. 
Chauvlne  r.  Fowler,  358. 
Cheever  v.  Pittsburg  etc.  Ry.  Co.,  269. 
Chemical  Nat.  Bk.  v.  Wagner,  270. 
Chemung  Canal  Bank  v.  Bradner,  92. 
Chessmer  v.  Noyes,  339. 
Chester  v.  Dorr,  264. 
Chicago  Ry.  Equipment  Co.  v.  Merchants 

Bank,  57. 
Chicago  T.  and   Sav.   Bk.  v.    Nordgren, 

224. 
Chick  V.  PUlsbary,  362. 
Chlcopec  Bk.  v.  Eager,  304. 

xxvii 


TABLE    OF    CASKS    CITED. 


References 

Chicopee  Bk.  v.  Phlla.  Bk.,  31S. 

Chllds  V.  Pellett,  503. 

Chipman  v   Tucker,  40. 

Chism  V.  First  Nat.  Bank,  19. 

Cholmley  v.  Darley,  66. 

Chouteau  v.  Allen,  25S,  268. 

Chouteau  v.  Webster,  360. 

Christian  v.  Morris,  106. 

Christy  v.  Canipban,  271. 

Chrysler  v.  Griswold.  31. 

Church  v.  Howard,  410. 

Cincinnati  etc.  Fish  Co.  v.  Nat.  Lafayette 
Bk.,  462. 

Cisne  V.  Chide8ter,57. 

Citizens  N.  Bk.  v.  Cade,  367,  369. 

Citizens  'Sat.  Bk.  v .  Importers'  <& 
Traders'  Bk.  (in  full), 420. 

Citizens'  Nat.  Bank  v.  Pioliet,27. 

Citizens'  Nat,  Bank  v.  Richmond,  407. 

City  Bank  v.  First  Nat.  Bk.,  415. 

City  Bank  v.  Perkins,  260 

City  Bk.  of  Dowagiac  v.  Dlel,  263. 

City  N.  B.v.  Clinton  Co.  N.  B.,  358. 

City  Nat.  Bank  of  Dayton  v.  Clin- 
ton Co.  Kat.  Bank  (in  full),  373. 

City  of  Elizabeth  v.  Force,  412. 

City  of  St.  i-ouis  v.  Shields.  96. 

City  Sav.  Bk.  v.  Ilopson,  390. 

City  Sav.  Bk.  v.  Kensington  Land  Co., 
343. 

Claflin  V.  Dawson,  207. 

Claflin  V.  Farmers'  etc.  Bk.,  463. 

Claflin  V.  Wilson,  221. 

Claiborne  Co.  v.  Brooks,  104. 

Clair  V.  Barr,  393. 

Clampitt  V.  Newport,  107. 

Clark  V.  Barnes,  29. 

Clark  V.  Boyd,  202,  211. 

Clark  V.  Calllson,  291,  292. 

Clark  t^.Eldrldge,  371. 

Clark  V.  Evans,  270. 

Clark  V.  Farmers'  Mfg.  Co.  36,  99. 

Clark  V.  Iowa  City,  99. 

Clark  V.  Lake  Ave.  etc.,  Sav.  &  L.  Assn., 
28,  96, 

Clark  V.  Moses,  107. 

Clark  V.  Schneider,  329. 

Clark  V.  School  District,  102. 

Clark  V.  Sigourncy,  11,  37. 

Clark  V.  Sisson.  256,  261,  294. 

Clark  V.  Spencer,  284. 

Clark  V.  Thayer.  150,  271. 

Clark  V.  Trueblood,  214. 

Clark  V.  Whitaker,  202,  291,  292. 

Clarke  v.  City  of  Des  Moines,  102. 

Clarke  v.  Gordon,  177. 

Clarke  v.  Johnson,  250,  257. 

Clarke  v.  Pease,  255. 

Clarke  v.  Percival,  56. 

xxviii 


are  to  Pages. 

Clarke  ^at.  Bk    v.  Bk.  of  Albion,  464. 

Clason  V.  Bailey,  14. 

Clavvson  v.  Munson,  61. 

Clay  V.  Erigerton,  430. 

Clements  i'.  Yeates,  166. 

Clews  V.  N.  Y.  Nat.  Bk.  Assn.,  462. 

Cline  V.  Guthrie,  253. 

Cloppcr's  Admr.  v.  Union  Bk.,  432. 

Clopton  V.  Hall,  149. 

Cloud  r.  Whiting,  279 

Ciongb  V.  Holden  (in  full),  345. 

Clough  V.  Holden,  341. 

Clongh  i:  Seay,  407. 

Clute  V.  Robison,  36. 

Cluter.  Small,  409. 

Clutton  V.  Attenborough,  19. 

Coal  Co.  V.  Haenni,  45. 

Coapstlck  V.  Bosworth  (lu  full),  68. 

Coates  V.  Thayer,  434. 

Cobb  V.  Duke,  22. 

Cochran  v.  Atchison,  214,  215. 

Cochran  r.  Nebeker.  409. 

Cochran  v.  Strong,  213. 

Cocker.  Branch  Bank,  91. 

Coco  r.  Gnmbel,  197. 

Coddington  v.  Davis,  390. 

Coffeltw.  Wise,  255. 

Coffey  V.  Reinhardt,  434. 

Coffraan  v.  Campbell,  177, 180. 

Coffin  V.  Loring,  315. 

CofBn  V.  Spencer,  27. 

Coggins  z\  Stockard,  407. 

Cohen  v.  Prater,  197. 

Cohn  V.  llusson,  147. 

Colbrin  v.  Averlll,427. 

Cole  f-  Gushing,  220. 

Cole  V.  Jessup,  306. 

Cole  V.  Merchants  Bank,  429. 

Colev.  Sachett,504. 

Coleman  v.  Burr,  110. 

Coliger  v.  Frrincis,  258. 

Collins  V.  Buckeye  State  Ins.  Co.,  88. 

Collins  x\  DrlscoU,  11. 

Collins  V.  Gilbert,  145. 

Collins  v.  Insurance  Co.,  236. 

Collins  V.  Stanfleld,  429. 

Collins  V.  Trotter,  304. 

Collis  V.  Emmett,  18,  49. 

Colorado  Nat.  Bank  v.  Boettcher,  178. 

Colson  V.  Arnot,  99,  214,  408. 

Colt-y.  Barnard,  359. 

Columbus  Ins.   Co.,  etc.  v.    First   Nat. 

Bank,  197. 
Comings  v.  Leedy,  80. 
Commercial  Bk.  v.   Barksdale,  338,  339, 

341,342,363. 
Commercial  Bk.  v.  Hughes,  3'X). 
Commercial  Bk.  v.  Varnum,  5,  314,   338 

339,  340,  341. 


TABLE    OF    CASES    CITED. 


References 

Commercial  Bk.  of  Albany  v.  Strong, 
365. 

Commercial  Bank  of  Lake  Erie  v.  Nor- 
ton, 85,  191. 

Commercial  Nat.  Bk.  v.  First  Nat.  Bk., 
472. 

Commissioners  v.  Block,  103. 

Commissioners  v.  Batterlck,  217. 

Commissioners  i\  Clark,  273. 

Commissioners  v.  Costello,  406. 

Commissioners  v.  Pallinger,  20. 

Commissioners  v.  Emigrant  Ins.  Bank, 
33 

Commissioners  v.  Foster,  406. 

Commissioners  v.    Indust.  Sav.  Bk.,  412. 

Commissioners  v.  Powell,  224. 

Comrs.  Knox  Co.  v.  Aspinwan,99. 

Comm's's  of  Madison  Co.  t'.  Clark,  264. 

Compton  V.  Blair,  383. 

Compton  V.  Patterson,  503. 

Comstock  V.  Hannah,  294. 

Comstock  V.  Hler,  150, 155,  271. 

Condon  v.  Pcarce,  214,  219 

Cone  V    Brown,  307,  499. 

Cone  V.  Rees,  432. 

Conkling  v.  King,  503 

Conn  V.  Tnornton,  26. 

Connelly  V.  McKean,  172. 

Connerly  v.  Planters  &c.  Ins.  Co.,  144. 

Connelly  v.  Goodwin, 343. 

Conover  v.  Earl,  213. 

Conover  v.  Insurance  Co.,  116. 

Conroy  v.  Ferric,  27. 

Conroy  v.  Warren,  464,  469. 

Cont.  Nat.  Bk.  v.  Cornhauser,  462. 

Conway  v.  'SVilMams,  144. 

Cook  r.  Baldwin,  176,  177. 

Cook  V.  r.eech,  503. 

Cook  V.  Rcnick,  328. 

Cook  V.  State  Nat.  Bank,  86,  97,  463. 

Cooke  V.  Pomeroy,389. 

Cooke  V.  State  Nat.  Bk  ,  464. 

Coolidge  V.  Brlgham,  403. 

Coolldge  V.  Payson,  179,  473. 

Coolidge  V.  Ruggles,  24. 

Cooper  V.  Cnrtls,  97. 

Cooper  v.  Machine  Co.,  284. 

Coojier  V.  Noek,  211. 

Copel  V.  Butter,  457. 

Coppr.  McDougall,  215,  384. 

Corbett  v.  Clark,  35. 

Corbin  r.  Planters'  N.  Bk.,  339,  363. 

Corbin  v.  Wachhorst,  146. 

Corcoran  v.  Cattle  Co.,  117. 

Corcoran  v.  Doll,  409. 

Cordellv.  McNeill,  429. 

Corgan  v.  Frew,  54,  218,  460. 

Corie  v.  Monkhouse,  200. 

Cork  V.  Bacon,  16,  465. 


are  to  Pages. 

Cornell  r.  Lovett,  481. 

Cornell  t\  Ncbeker,  282. 

Cornett  r.  Haf.er,  363. 

Corn  Kxch.  IJk.  v.  Nassau  Bk.  422. 

Corser  i\  Paul,  86. 

Cortelyon  v.  Maben,  177. 

Costello  V.  Crowell,  24, 196. 

Costello  V.  Wilhelm,  434. 

Costigan  v.  Hawkins,  199. 

Couch  V.  SherrlU,  344. 

Couch  v.  Waring,  433. 

Coursln  v.  Ledlle,  144. 

Courtney  V.  Doyle,  34,  144. 

Courtney  v.  Hogan,  504. 

Cowing r.  Altman,  11, 152,  470,  471. 

Cowlesi'.  Harts,  371. 

Cowles  V.  Pick.  427,  428,  430. 

Cowperthwaite  v.  Sheffield,  307,358. 

Cowthey  i\  Vandenburgh,  196. 

Coxr.  Bank,  347. 

Cox  V.  Boone,  466,  467. 

Cox  V.  Beltzhoover,  17. 

Cox  V    National  Bank,  34,  165,   166,  167, 

180,304,  305,311. 
Cox  V.  Troy,  193. 
Cozzens    v.   Chicago    Hydraulic   Press 

etc.,  Co.,  225. 
Crabtree  v.  May,  77. 
Craft's  Appeal,  257. 
Craft  I'.  Railroad  Co.,  117. 
Craig r.  Brown,  220. 
Craig  r.  Parkis,  446. 
Craig  V.  Price,  167. 
Craighead  v.  McLoney,  408,  410,  416. 
Craighead  v.  Peterson,  85. 
Craln  r.  Colwell,  392. 
Crawson  v.  Goss,  11, 12,  36. 
Cravens  v.  Logan,  107. 
Crawford  i\  Spencer,  146,  442. 
Crawford  v.  West  Side  Bk.,  410. 
Creamer  f .  Perry,  388. 
Credit  Co.  v.  Howe  Machine  Co.,  95, 174. 
Cremeri'.  Hlgglnson,  427,  428, 
Creswell  v.  Holden,  98. 
Cribbs  v.  Adams,  315,  339,  341. 
Crlm  V.  Starkweather,  215,  266. 
Cristy  I'.  Campau,  248. 
Crittenden  Co.  r.  Shanks,  103. 
Crocker  v.  Colwell,  93. 
Cromer  r.  Piatt,  371. 
Cromwell  v.  County  of  Sac,  261,  268. 
Cromwell  v.  Hewitt.  212,  430. 
Cromwell  v.  Lac.  Co.,  103. 
Cronlsc  r.  Kellogg,  432. 
Crooker  r.  Holmes, 27. 
Crooks  V.  TuUy,  225. 
Crosby  r.  Grant,  268 
C^O!^by  r.  Roub,  218. 
Cro-sby  v.  Tanner,  263. 

xxix 


TABLE    OF    CASES    CITED. 


References  are  to  Pages. 


Croekey  v.  Skinner,  411. 

Cross  V.  Brown,  266. 

Cross  V.  Holli8ter,215. 

Croseman  v.  May,  266. 

Grossman  v.  May,  149. 

Crosthwalte  v.  Hose,  91. 

Croswell  v.  Lanahan,  86. 

Crowell  V.  Van  Cibler,  178. 

Cruger  v.  Armstrong,  382,  464,  465,  467. 

Crump  V.  Berdan.  29. 

Cudahy  Packing  Co.  v.  Slonx  Nat.  Bank, 

21. 
Culberteon  v.  Nelson,  28,  29,  30. 
Culbertson  v.  WUcox,  431,  432. 
Culver  V.  9Iarks  (in  full),  396. 
Culver  V.  Marks,  469. 
Cnmmings  v.  Freeman,  23. 
Cummings  v.  Gassett,  17,  23. 
Cummings  v.  Hummer,  180. 
Cummings  v.  Kent,  236,  238. 
Cundy  v.  Marriott,  358. 
Cunningham  v.  Wardwell,  20,  172. 
Careton  v.  Moore,  80. 
Currier  v.  Davis,  399. 
Currier  V.  Lockwood,  23. 
Curry  v.  Bank  of  Mobile,  220. 
Curry  v.  Powers,  205. 
Curtis  V.  Mohr,  151,  261. 
Curtis  V.  Smallman,426. 
Curtis  V.  Sprague,  197. 
Curtiss  V.  Leavitt,  103. 
Curtlss  V.  Martiue,  384,  389. 
Cushlng  V.  Field,  412. 
Cushing  V.  Fifleld,  24,  66. 
Cushlng  V.  Gore,  465. 
Cushing  v.  Rice,  493. 
Cushman  v.  Haynes,  28. 
Custis  V.  Sprague,  220. 
Cutler  V.  Parsons,  214. 
Cutts  V.  Perkins,  175,  471. 
Cuyler  v.  Stevens,  369. 

D 

Dagget  V.  Whiting,  271. 
Darkins  v.  Graves,  343. 
Dalton  City  Bk.  v.  Haddock,  315. 
Daly  V.  Proetz,  316. 
Dana  v.  Sawyer,  170,  348. 
Daniels  v.  Wilson,  261. 
Darland  v.  Taylor,  204. 
Darling  v.  Wooster,  265. 
Darwin  v    Rijdey,  410. 
Davenport  r.  Stone,  271,  292. 
Davidson  r.  Lanier,  40. 
Davidson  v.  Powell,  224. 
Davidson  v.  Robertson,  6. 
Davis  V.  Barger,  39. 
Davis  V.  Barron,  244. 

XXX 


Davis  V.  Bartlett,  273,  274. 

Davis  V.  Blanton,  273. 

Davis  V.  Burt.  371. 

Davis  V.  Clark,  173,  181. 

Davis  V.  Dayton,  470. 

Davis  V.  Eppler,  368,  385,  386. 

Davis  V.  Francisco,  309. 

Davis  V.  French,  106. 

Davis  V.  Jenney,  409. 

Davis  V.  Johnson,  203. 

Davis  V.  Lee,  283. 

Davis  V.  McCready,  271,  279. 

Davis  V.  Melller,  361,  392. 

Davis  V.  Morgan,  216. 

Davis  V.  Neligh,  264. 

Davis  V.  Noll,  263. 

Davis  V.  Phillips,  501. 

Davis  V.  Statts,433. 

Davis  V.  Wells,  390. 

Davis  V.  W.  Saratoga  Bldg.  Union,  95. 

Davison  v.  City  Bank,  504. 

Day  V.  Jones,  433,  434. 

Day  V.  Kinney,  503. 

Day  i\  Ramsdell,  98. 

Day  V.  Thompson,  503. 

Day  V.  Zimmerman,  272. 

Dayton  v.  Dale,  82. 

Deacon  v.  Stodhart,  497. 

Dean  v.  Caruth,34,  205. 

Dean  v.  De  Legardi,  11. 

Dean  v.  Hall,  197. 

Dean  v.  Richmond,  80. 

Debesse  v.  Napier,  175,  471. 

Dcblieux  V.  Bullard,  363. 

Dcbruhl  v.  Maas,  203. 

Debuy's  v.  Moliere,  392. 

Deere  v  Marsden,  442. 

Deoring  v.  Wiley,  389. 

Dellass  V.  Roberts,  26. 

Deininger  v.  Miller,  361. 

Delano  V.  Bartlett,  35. 

DeLiqucro  v.  Munson,  166. 

DeLong  V.  Barnes,  145. 

DeLong  V.  Schroeder,  270. 

DeMeets  v.  Dagson,501. 

Dennis  v.  Williams,  503. 

Denston  v.  Henderson,  498. 

Dennlstown  v.  Stewart,  341,  370. 

Depeau  v.  Waddington,  151. 

Derby  v.  Thrall,  418. 

Derr  v.  Keougli,  410,413. 

Derrickson  v.  Whitney,  342. 

Derry  ».  Holman,  219. 

Des  Arts  v.  Leggett,  393. 

Desha  V.  Stewart,  166. 

Des  Moines  Ins.  Co.  v.  Mclntire,  77. 

Deutsche  Bk.  v.  Berirs,  505. 

Devendorf  r.  Oil  Co,  136. 

Devereaux  v.  Phillips'  Estate,  150.  , 


TABLE    OF    CASES    CITED. 


References 

Devries  v.  Shamate,  37. 

De  Witt  V.  Boring,  432. 

Dewitt  V.  Perkins,  258. 

DeWilt  V.  Walton,  122. 

Dicken  v.  ilall,  oG3,  368. 

Dickens  V  Ileal,  343,  314,  345,  383. 

Dickerson  v.  Derrickson,  426,  430. 

Ulckersoa  v.  Turner,  342. 

Dickinson  v.  Cootes,  473. 

Dickinson  r.  Marsh,  178. 

Dietrich  r.  Uay  hi,  58. 

Dillard  v.  Evans,  31,  501. 

Dillon  V.  Hussell,  434. 

Disborough  1'.  Vanness,  214. 

District  of  Columbia  r.  Cornell,  104. 

Dively  v  Cedar  Falls,  102. 

Dobbins  v.  Parker,  67. 

Dobree  i\  Eastwood,  364,  36(5,  377. 

Dodd  V.  Bishop,  87. 

Dodd  V.  Doty,  223. 

Dodd  V.  Dunne,  38. 

Dodge  r.  Bank,  47,49. 

Dodge  V.  Emerson,  28,  502. 

Dodge  V.  Friedman's  &c.  Trust  Co., 
497. 

Dodge  V.  Haskell,  409. 

Dodge  V.  Nat.  Exch.  Bk.,  308,  461. 

Dodson  V.  Taylor,  3G1,  370. 

Doc  V.  N.  W.  Coal  &  T.  Co.,  155,  270. 

Dollfus  V.  Frosch,  382. 

Donavan  v.  Flynn,  176. 

Donegan  v.  Wood,  340,  372. 

Donnell  v.  Bank,  327. 

Donnell  r.  Lewis  Co.  Sav.  Bk  ,  384. 

Donnerbcrg  v.  Op[)cnheimer,  2G4. 

Donohoe-Kelly  Bkg.  Co.  v.  Puget  Sound 
Sav.  Bk.,225. 

Doolittle  V.  Lyman,  146. 

Uo.m  V.  Sliervvin,  226. 

Dorchester  &  Meilton  Bk.  v.  New  Eng- 
land Bk.,243. 

Dorsey  v.  Wolir(ln  full),  56. 

Dorsey  v.  Wolff,  29. 

Doty  V.  Knox  Co.  Bank,  147. 

Doubleday  v.  Kress,  308,  499. 

Dougherty  v.  Dewney,  496,  497. 

Douglass  V.  Bank  of  Commerce,  313, 
338. 

Douglass  V.  Cowles,  172. 

Douglass  V.  Ilowland,  428. 

Douglass  r.  Reynolds,  427,  428,  430. 

Douglas  V.  Waddle,  237. 

Dow  V.  Spcnny,  414. 

Dow  V.  Tuttlo,  67,  279. 

Dowr.  iri)dike,30. 

Downer  r   Head,  89. 

Downer  v.  Ui-mer,  367. 

Downey  r.  Hick,  503. 

Downes  i'.  Church,  172. 


are  to  Pages. 

Downing  v.  Gibson,  264. 

Downs  V.  Planters'  Bk.,  362. 

Draper  v.  Clemens,  309,  318. 

Drake  i-.  Rogers,  39. 

Draper  v.  Sexton,  503. 

Draper  v.  Snow,  427,  428. 

Drapers.  Wood,  410. 

Dreillingv.  First  Nat.  Bk.  (in  full), 

283. 
Drennan  v.  Bunn,  216. 
Dresser  v.  Mo.  &c.  Ry.  Co.,  261,  268. 
Drew  V.  Drury,  454. 
Drexler  r.  McGlynn,  353,  361,  366,  379. 
Driggs  V.  Abbott,  80. 
Driggs  V.  Rockwell,  264. 
Drum  V.  Drum, 403. 
Dryden  v.  Brilton,  202,  211. 
Dubois  V-  Meason,  224. 
Dncker  v.  Rapp,  434. 
Duckert     i'.    Von    Lilienthal,    342,    343, 

344. 
Dnfaur  v.  Oxenden,  174,  177. 
Dugan  V.  United  States,  499,  501. 
Dugan  V.  U.  S.  Bank,  308. 
Duker  r.  Franz,  418. 
Dumonii'.  Pope,  343. 
Dumont  V.  Williamson,  144,  214,  216. 
Dunavan  r.  Flynn,  37. 
Duncan  v.  Berlin,  176. 
Duncan  v.  Gilbert,  300. 
Duncan  v.  McCullough,  306. 
Duncan  v.  Scott,  255. 
Dunlap  r.  Thomson,  368. 
Dunn  V.  ?«lorri8,  211. 
Dunn  r.  Parson,  345. 
Dunn  V.  AVeslon,  264,  272. 
Durant  r.  Banter,  261. 
Dunlcn  r.  Smith,  382. 
Dure  in  r.  Moeser,  201. 
Durham  v.  Giles,  433. 
Durham  v.  Price,  388. 
Dutch  V.  Boyd,  400. 
Dutchess  Co.  Ins.  Co.  v.  Hatch,  274. 
Dutchess    Co.    Ins.    Co.   r.    Ilatchfleld, 

21. 
Dutton  V.  Marsh,  36. 
Duvall  V.  Craig,  98. 
Duvall  V.  Farmers'  Bk.,  389. 
D'Wolf  r.  Rabaud,  438,439. 
Dye  V.  Scott,  237. 
Dyer  v.  Gilson,  429. 
Dyer  v.  Homer,  196. 
Dykers  r.  Leather  Mfg.  Bk.,  469. 
Dykcrs  v.  Leather  Mfg.  Co.,  465. 
D)  kcrs  V.  Townsend,  S3. 
Dykman  v.  North,  idge,  l.')4,318. 
Dymock  v.  Midland  Nat.  Bank,  151. 
Dwlghtr.  5cov.ll,  884. 
iJwycr  r.  Markwortli,  103. 

xxxi 


TABLE    OF    CASES    CITED. 


E 


Eadie  v.  Ashbaugh,  86. 

Eagle  Bk.  r.  Hathaway,  364. 

Earhart  r.  Gant,  262. 

Eastf.  Smith,  371. 

Easter  r.  Boyd,  61. 

Easterly  v.  Barber, 216. 

East  Haddam  Bk.  v.  Scoville,  358. 

Eastman  v.  Furman,  371. 

Eastman  v.  Plamer,  497. 

Eastman  v.  Shaw,  145,250. 

East  Union  v.  Ryan,  104. 

Eaton  V.  McMahon,  385. 

Eutouf.  Melius,  234,  235. 

Eberhart  v.  Page,  226. 

Eddy  t'.  Bond,  197. 

Edgell  V.  Sigerson,  352,  353. 

Edgerly  v.  Shaw,  77. 

Edgmon  v.  Ashelby,  304. 

Edis  V.  Bury,  9. 

Effingor  r.  Kichards,  66,  67. 

Eggcmann  v.  Ilenschen,  433. 

Ehrlcker.  DeMeill,  27. 

Ehrler  v.  AVorthen,  271. 

Eilbert  v.  Finkbeiner,  226, 

EiBeley  r.  Harr,  436. 

Eitingi'.  Brlnkerhoff,  171. 

Elford  V.  Teed,  349,  350. 

Elkhart  v.  Reidel,  87. 

Ellet  r.  Britton,  28. 

Elliott  V.  Deason,  38,  67,  264. 

Elliott  V.  Levings,  413. 

Ellis  V.  Ohio  L.  Ins.  Co.,  182,  414. 

Ellis  V.  Pulsifer,  97. 

Ellis  V.  Wheeler,  465. 

Ellsworth  ■J'.  Harmon,  429. 

Ellsworth  r.  St.  Louis  R.  R.  Co.,  96. 

Ely  V.  Ely,  409. 

Ely  V.  James,  503. 

Emerson  v.  Burns,  274. 

Emerson  v.  Cutts,501. 

Emery  r.  Hobson,  148. 

Emery  v.  Marlaville,  104. 

Emly  V.  Lye,  133. 

Ernst  r.  Steckman,  26,  57. 

Episcopal    Charitable    Soc.  v.  Dedham 

Episcopal  Church,  86. 
Epler  V.  Funk,  233,  234. 
Equitable  Ins.  Co.  v.  Harvey,  222. 
Equitable    National     Bk.    v.   Grifln    & 

Skilley  Co.,  505. 
Erie  Boot  &  Shoe  Co.  r.  Eickenland,  95. 
Erwin  v.  Downs,  214,  310. 
Esau  V.  Greene  Button  Co.,  200. 
Espy  V.  Bk.  of  Cincinnati,  182,  459,  462, 

463. 
Essex  Co.  Nat.  Bk.  v.  Bk.  of  Montreal, 

462,  477. 

xxxii 


References  are  to  Pages. 

Estate  of  Bk.  of  Pennsylvania,  304. 

Estes  V.  Lovering  Shoe  Co  ,  470. 

Etheridge  v.  Gallagher,  145,  263. 

Etting  V.  Schuylkill  Bk.,  362. 

Evans  v.  Anderson,  113. 

Evans  v.  Baker,  215. 

Evans  w  Foreman,  409. 

Evans  v.  Gee,  219. 

Evansville  Nat.  Bk.  v.  Kaufman,  427. 

Everett  r.  Tldball,  219. 

Everhart  v.  Buckett,  146. 

Eversole  v.  MauU,  264. 

Everson  r.  Carpenter,  76. 

Evertson  v.  Nat.  Bank,  99. 

Exchange  Bank  v.  Butner,  261. 

Exchange  Bank  v.  Hubbard,  178. 

Exchange  Bank  v.  Sutton  Bank,  460,  46L 

465,  469. 
Exchange  Bank  of  St.  Louis  v.  Rice,  174. 
Exchange  Nat.  Bk.  v.  Johnson,  499. 
Exeter  Nat.  Bank  v.  Orchard,  147. 
Ex  parte  Barclay,  358. 
Ex  parte  Cole,  38. 
Ex  parte  Hibbs,  406. 
Eyre  v.  Everett,  457. 


F 


Fairbanks  v.  Sargent,  294. 

Fairchild  v.  Ogdenburg,  etc.,  R.  R.  Co. 

100,384. 
Faler  v.  Jordan,  92. 
Fales  V.  Russell,  393. 
Falk  V.  Moebs,  134. 
Fall  River  Union  Bank  v.  Wlllard,  171, 

172. 
Farmer  v.  Perry,  427. 
Farmers'  Bank  v.  Duvall,  318. 
Farmers'  Bank  v.  Ewlng,  65,  66,  388,  389. 
Farmers'  Bk.  v.  Gunnell,  382. 
Farmers'  Bk.  v.  Reynolds,  434. 
Farmers'  Bank  of  Bridgeport,  v.  Vail, 

363. 
Farmers'  Bank  of  Springvllle  v.  Shippey, 

30. 
Farmers'  etc.  Bank  r.  Battle,  369. 
Farmers'  etc.  Bk.  v.  Butler,  255. 
Farmers'  etc.  Nat.  Bk.  v.  Moxon,  271. 
Farmers'  Nat.  Bk.  v.  Sutton  Mfg.  Co., 

95. 
Farmers' &  Mech.  Bk.  r.  Empire  Stone 

Dressing  Co.,  190. 
Farmers'  &  M.  Ins.  Co.  v.  Needles,  96. 
Farmers'  &  M.  N.  Bk.  v.  Novlch,  410,  413. 
Farmers'  &  Trad.  Bk.  v.  Carter  Co.,  463. 
Farmington  S.  Bk.  v.  Fall,  96. 
Farnsworlh  v.  Allen,  317,  336,  349,  360. 
Farnsworth  v.  Drake,  19. 
Farnsworth  r.  Mullen,  311. 


TABLE    OF    CASES    CITED. 


References 

Farr  v.  Rick<>r  (in  full),  235. 

Farr  v.  Ricker,  210. 

Farrell  v.  Curtis,  468. 

FarwcU  v.  Salpaugh,  502. 

Farwell  v.  St.  Paul  Trust  Co.,  385,  386, 

389,  393. 
Fossin  V.  Hubbard,  215,  360. 
Faucclt  t'.  Powell,  274. 
Faulkner  t'.  Ware,  273. 
Favorite  v.  Stidhani,  410. 
Fawsettr-.  Nat.  Life  Ins.  Co.,  221,222. 
Faxon  r.  Ilollis,  403. 
Fay  V.  Fay,  146. 
Fay  r  Gaynon,  196. 
Fay  r.  Noble,  95,  116. 
Fay  V.  Smith,  410. 

Fayette  Co.  Sav.  Bk.  v.  Steffes,  254. 
Fearing  v.  Clark,  40. 
Feiterr.  Heath,  87. 
Fell  V.  Dial,  359. 
Fellows  V.  Prentiss,  434. 
Fcnn  V.  Dugdale,  499. 
Fenn  v.  Harrison,  133,  233. 
Fernandez  v.  Lewis,  167. 
Fernekes  v.  Bergenthal,  145. 
Ferree  v.  N.  Y.  Security  &c.  Co.,  263. 
Ferris  v.  Bond,  12. 
Ferris  v.  Thaw,  135. 
Field  V.  Munson,  141. 
Field  i\  Nlckerson,  214. 
Field  v.  Tibbltts,  267. 
Fieder  v.  Marshall,  173. 
Fllley  V.  Phelps,  93. 
Finley  i\  Green,  226. 
First  Nat.  Bk.  v.  Adam,  150. 
First  Nat.  Bk.  v.  Alton,  150. 
First  Nat.  Bk.  v.  Babbridge,  269. 
First  Nat.  Bk.  v.  Ballou,  86. 
First  Nat.  Bk.  v.  Bensley,  170,  180. 
First  Nat.  Bk.  v.  Bentley,  lo4. 
First  Nat.  Bk.  v.  Buckhannon  Bk,  467. 
First  Nat.  Bk.  v.  Carpenter,  42'.). 
First  Nat.  Bk.  r.  Carson,  25. 
First   Nnt.   Itk.    v.  <'ecll,   (In    full), 

156. 
First  Nat.  Bk.  v.  Cecil,  14'.>. 
First  Nat.  Bk.  v.  Clark,  17.5. 
First  Nat.  Bk.  r.  Com po- Board  Mfg.  Co  , 

252. 
First  Nat.  Bk.  v.  De  Morse,  386. 
First  Nat.   Bk.   v.    Dubnque,  S.   \V.   U. 

R.  Co.,  29. 
First  Nat.  Bk.  v.  Falkenhan,  390. 
First  Nat.  Bk.  r.  Forsyth,  268. 
First  Nat.   Bk.  v.  Fourth  Nat.  Bk.,  167, 

505. 
First  Nat.  Bk.  v.  Gaines,  432. 
First  .\at.  lik.t'.  Garsldo,  174. 
First  Nat.  Bk.  v.  Gay,  29,  85,  t6,  87. 


are  to  Pages. 

I    First  Nat.  Bk.  r.  Getz,  272. 
First  Nat.  Bk.  v.  GIsh,  82. 
First  Nat.  Bk.  v.  Green,  274. 
First  Nat.  Bk.  v.  Gregg,  221. 
First  Nat.  Bk.  v.  Harris,  470. 
First  Nat.  Bk.  v.  Hartman,  391. 
First  Nat.  Bk.  v.  Johnson,  18. 
First  Nat.  Bk.  v.    Knevals,  503. 
First  Nat.  Bk.  v.  Laughlln,  29. 
First  Nat.  Bk.  v.  Leach,  462. 
First  Nat.  Bk.  v.  Leavltt,  434. 
First  Nat.  Bk.  v.  Linn  Co.,  465. 
First  Nat.  Bk.  f.  Marlow,  30. 
First  Nat.  Bk.  v.  Ma.xfleld,  389. 
First  Nat.  Bk.  v.  Maxwell,  493, 5a5. 
First  Nat.  Bk.  r.  Miller,  467,  469, 
First  Nat.  Bk.  r.  Morgan,  92. 
First  Nat.  Bk.  v.  Moss,  183. 
First  Nat.  Bk.  v.  Needham,  470. 
Flret  Nat.   Bk.   r.   North  Missouri   &c 

Co.,  131. 
First  Nat.  Bk.  v.  N.  W.  Nat.  Bk.,  462. 
First  Nat.  Bk.  v.  Owens,  317. 
First  Nat.  Bk.  v.  Payne,  225. 
First  Nat.  Bk.  v.  Price,  24,  314. 
First  Nat.  Bk.  r.  Reno  Co.  Bk.,  22L 
First  Nat.  Bk.  r.  Uyerson,  359,  369. 
First  Nat.  Bk.  v.  Scott  Co.,  268. 
First  Nat.  Bk.  v.  Shoemaker,  472. 
First  Nat.  Bk.  v.  Skeen,  26. 
First  Nat.  Bk.  v.  Slaughter,  29. 
First  Nat.  Bk.  v.  Slette,  29. 
First  Nat.  Bk.r.  Sproull,  273. 
First  Nat.  Bk.  v.  Strang,  200. 
First  Nat.  Bk.  v.  Stuetzer,  98. 
First  Nat.  Bk.  v.  Wade,  258. 
First  Nat.  Bk.  r.  Wallis,  270. 
First  Nat.  Bk.  r.  Weston,  148. 
First  Nat.  Bk.  v.  Whitman,  177. 
First  Nat.  Bk.  t:  Wolff,  415. 
First  Nat.  Bk   r.  Wood,  368. 
First  Nat.  Bk.  r.  Zclma,  25.3. 
First  Nat.  Bk.  of  Portland  v.  Schuyler, 

190. 
First  Nat.  Bk.  of  Salem  v.  Grant,  222. 
First  Nat.  Bk.  of  Trenton  i\  Gray,  21». 
Fish  f.  First  Nat.  Bk.,  214. 
Fish  V.  Hubbard,  141. 
Fisher  r.  Beckwlth,  171. 
Fisher  v.  Fisher,  300. 
Flske  V.  Eldrldge,  98. 
Fiske  V.  Pratt,  .3.'>9. 
Fitch  V.  Jones,  06. 
Fltchburg  Bk.  c.  Greenwood,  215. 
Fitlcr  r.  Beckley,  320,  321. 
Fltzharrls  v.  Leggatt,  29. 
Fitzmaurlce  r.  Mosier,  601. 
Flanagan  v.  Brown,  221. 
Flanagan  v.  Meyers,  39. 

xxxiii 


TABLE    OF    CASES    CITED. 


References  ar 

Flanagan  v.  Nat.  Bk.  of  Dover,  iOl. 

Flanders  v.  Chamberlain,  305. 

Fleschman  v.  Stern,  255. 

Fleming  v.  Gilbert,  67. 

Fletchers.  Ark.  N.  B.,  343. 

Fletcher  v.  Blodgett,  66. 

Fletchers.  Dickinson, 299. 

Fletcher  v.  Jackson,  436. 

Fletcher  v.  Pierson,  308,  469. 

Fletcher  v.  Schaumberg,  270. 

Fletcher  v.  Thompson,  355. 

Flights.  McLean,  20. 

Flint  V.  Flint,  213,  218. 

Florence  Min.  Co.  v.  Brown,  472. 

Flour  City  Bank  v.  Grover,  273. 

Flournoy  v.  First  Nat.  Bk.,  183. 

Flowers  v.  Bitting,  13. 

Flynn  v.  Mudd  &  Hughes,  454. 

Fogarttes  v.  State  Bk.,  472. 

Foland  v.  Boyd,  384. 

Folger  V.  Chase,  218,  318,  412. 

Forbes  v.  Espy,  50. 

Forbes  v.  Omaha  N.  B.,  369. 

Ford  V.  Angelrodt,  179,  181. 

Ford  V.  Ford,  408. 

Fordyce  v.  Nelson,  213. 

Foreman  v.  Buckwith,  201. 

Forster  v.  Fuller,  107. 

Forster  I'.  Second  Nat.  Bank,  200. 

Forsyth  v.  Day,  84. 

Fort  Dearborn  N.  Bk.  v.  Carter,  175. 

Foster  v.  Clifford,  ISO. 

Foster  v.  Gaston,  434. 

Fosters.  Mackinson,287. 

Foster!'.  Paulk,  143. 

Foster  v,  Shattuck,  19. 

Fountain  v.  Anderson,  105. 

Fountain  v.  Bookstaver,  218. 

Fourth  Nat.  Bk.  v.  Altheimer,  365. 

Fourth  Nat.  Bk.  v.  City  Nat.  Bk.,  495. 

Fourth  Nat.  Bk.  v.  Henschen.  168,  310, 

360. 
Fowler  V.  Gate  City  N.  Bk.,  177. 
Fowler  v.  Strickland,  260. 
Fox  V.  Bank,  285. 
Fox  V.  AVebster,  353. 
Froy  V.  Blackstone,  40. 
Fraker  v.  Cullom,  409. 
Fraker  v.  Little,  415. 
Fralich  v.  Norton,  28. 
Frank  v.  Irglns,  144, 
Frank  v.  Kalgler,  213. 
Frank  v.  Lanier,  199. 
Frank  v.  Lillenfeld,  224. 
Frank  v.  Wessels,  25,  31. 
Frankland  v.  Johnson    in  full),  125. 
Frankland  v.  Johnson,  97. 
Franklin  v.  March,  23. 
Franklin  v   Twogood,  201. 

xxxiv 


e  to  Pages. 

Franklin  v.  Vanderpool,  393. 

Franklin  Ave.  Ger.  Sav.  Inst.  v.  Board  of 

Education,  135. 
Franklin  Bank  v.  Freeman,  464. 
Franklin  Bank  v.  Lynch,  179. 
Franklin  L.  Ins.  Co.  v.  Courtney,  410. 
Franklin  Life  Ins.  Co.  v.  Wallace,  502. 
Franklin  Sav.  Bank  v.  Reed,  66,  68. 
Frayser  v.  Dameron,  309. 
Frazer  v.  D'Invilliers,  215. 
Frazier  v.  Trow  Printing  Co.,  11. 
Freanorv.  Glngling,  434. 
Frederick  v.  Winans,  211,  244. 
Freking  v.  Rolland,  109. 
Freeman  v.  Benedict,  503. 
Freeman  v.  Bingham,  211. 
Freeman  v  Boynton,  168,  169,  501. 
Freeman  I'.  Ellison,  216. 
Freeman  v.  O'Brien,  214. 
Freeman  v.  Perry,  201. 
Freeman's  Bank  r.  Ruckman,  34. 
Freeman's  Nat.  Bk.  v.  Nat.  Tube  Works, 

221,243. 
Freese  I'.  Brownell,113. 
Frenall  v.  Fitch,  .35. 

French  r.  Bk.  of  Columbia,  150,383,  393. 
French  v.  French,  152. 
French  v.  Jarvis,  222,  .3.i9,  ,360,  498. 
French  v.  Price,  89. 
French  v.  Talbot  Pat.  Co.,  274. 
Freund  v.  Imp.  &  Trad.  N.  Bk.,  201,  291, 

293,  461. 
Friend  r.  Duryee,  91. 
Friend  v.  Williamson,  363. 
Frost  V.  Stokes,  312. 
Fry  V.  Evans,  107. 
Frye  v.  Lucker,  96. 
Fuller  V.  Goodnow,  248,  265. 
Fuller  V.  Hooper,  136,  384. 
Fuller  V.  Leonard,  166. 
Fuller  V.  Scott,  225,  431. 
Fuller  V.  Smith,  Ryan  &  Mood,  234. 
Fulton  V.  MacCracken,  343. 
Funderburk  v.  Gorham,  106. 
Fnnk  \.  Babbitt  (in  full), 41. 
Funk  V.  Babbitt,  16. 
Furber  v.  Caverley,  23,  390. 

G 

Gaar  v.  Banking  Co.,  59. 
Gage  V.  AveriU,  223. 
Gage  V.  Mechanics'  Bank,  429. 
Gaines  i-.  Manney,  323. 
Galbraith  r.  Townsend,  433,  434. 
Gale  r.  Miller,  36,  37. 
Galena  v.  Corwith,  102.  103. 
Galway  v.  Fullerton,  200. 
Gaudy  v.  Babbitt,  104. 


TABLK    OF    CASES    CITED. 


References 

Gardner  v.  Gardner,  Hi. 

Gardner  v.  Maynard,  497,  498. 

Gardner  v.  AVatson,  435. 

Gardner  v.  Cohen,  153. 

Garnelt  r.  Woodcock,  351,  362. 

Garrard  v.  Lewis  L.  R.,  412. 

Garretson  v.  North  Atchison   IJk.,  177, 

179,  463. 
Garrett  v.  Interstate  Bank,  33. 
Garrigus  v.  Home  &c.  Soc.,38. 
Garver  v.  Downic,  365. 
Garvin  v.  Wiswell,  197,  212. 
Gates  V.  Beecher,  168,  310,  312,  370, 
Gates  V.  McKee,  427. 
Gates  V.  Parker,  178. 
Gates  r.  Union  Bank,  152. 
Gaul  V.  Willis,  259,  260. 
Gause  v.  City  of  ClarksvUle,  102. 
Gawtry  v.  Doane,  341,  342,  372,  386. 
Gay  f.  Mott,  149. 
Gay  V.  Rooke,  23. 
Gaylord  V.  Van  Loan,  24. 
Gazzam  v.  Armstrong,  181. 
Geary  v.  Physic,  52. 
Oeddes  t.  Blackmore  (in  fall),  281. 
Geddes  v.  Blackmore,  252. 
Gelb  V.  Reynolds,  502. 
George  v.  Surrey,  52. 
Georgia  Nat.  Bank   v.    Henderson,  314, 

459,  460. 
Germanla  Bank  v.  Distlcr,  11. 
Germania  Bank  v.  Follette,  216. 
German  Nat.  Bank  v.  Studley,  86. 
Germanic  Nat.  Bank  v.  Taaks,  177. 
Germ.  Secur.  Bk.  v.  McGnrry,  372. 
Gessner  v.  Smith,  339,  340,  345. 
Gettysburg  N.  Bk.  v.  Chlsolm,  407,  410, 

413. 
Gibbs  V.  Linabury,  254. 
Glbert  v.  Sless,  145. 
Gibson  V.  Hunter,  49. 
Glbsonv.  Miller,  262,273. 
Gibson  V.  Tobey,  503. 
Glddings  V.  Giddings,  38. 
Giffcrtf.  West,  199. 
Glflord  V.  Harden,  468,  471. 
Gilbert  V.  Dennis,  369. 
Gilbert  v.  Nantucket  Bk.,  212. 
Gilbert  v.  Seymour,  212. 
Gilbert  r.  Sharp,  291,  293.       , 
Gilchrist  V.  Donnell,  314,  363,  386. 
Glllf.  Palmer,  370. 
Glllett  V.  New  Market  Sav.  Bk.,  98. 
Gillettr.  Sweat,  410. 
Gilliam  v.  Uavis,  497. 
Gillilan  v.  Meyers,  22, 18.1. 
Gilman  v.  County  of  Douglass,  500 
Gllmore  V.  lllr.'4t,29. 
Qilroy  v.  Brlnkley,  382. 


are  to  Pages. 

Girard  Bk.  v.  Bk.  of  Penn.  Twp.,  462. 

Gist  V.  Lybrand,  308. 

Givensv.  Merchants'  Nat.  Bk.,  216,  217, 

392. 
Glascock  V.  Robards,  147. 
Glaserr.  Rounds,  386. 
Glasgow  i:  Pratte,  359,  369. 
Glaze  V.  Ferguson,  391. 
Glen  V.  Farmers'  Bank,  146. 
Glen  V.  Noble, 464. 
Gllcksman  v.  Earley,  370. 
Glldden  r.  Chamberlain,  392. 
Gloucester  Bk.  r.  Saline  Bk.,  414. 
Gobble  v-  Linder,  59. 
Goddard  r.  Merchants'  Bk.,501. 
Goddard's  Case,  62. 
Goetz  V.  Bank  of  Kansas  City,  221. 
Goizlan  v.  Steinkamp,  145. 
Gompertz  v.  Bartlett,  234, 
Good  r.  Jtartin,  149,223,  224,  226,427. 
Gooding  v.  Underwood,  173. 
Goodloe  V.  Godley,  317. 
Goodlowe  V.  Taylor,  26. 
Goodman  v.  Litaker,  432. 
Goodman  v.  Ramsey  Co.,  103. 
Goodman  v.  Simonds,  11,  145,  154,  155, 

248,  273. 
Goodnow  V.  Warren,  361,  380. 
Goodsell  i\  Meyers,  77. 
Goodspeed  v.  Cutler,  409. 
Goodwin  V.  Davenport,  202,  211. 
Gordons.  Adams,  38. 
Gordon  v.  Boppe,  151,  261. 
Gordon  v.  Preston,  265. 
Gordon  v.  Price,  503. 
Gorham  v.   Kcyes,  116. 
Gorman  v.  Ketchum,218. 
Oostaen   fiat.    Bk.  v.   Biug'iiam    (la 

full),  290. 
Goshen  Nat.  Bk.  v.  Biugham,  463. 
Gould  V.  Stephens,  258. 
Goupy  V.  Harden,  233. 
Gowan  v.  Jackson,  170. 
Grafton  Bk.  r.  Cox,  314,  385,  386. 
Graham  1-.  Langston,  371. 
Grand  Bank  v.  Blanchard,  318. 
Grange  v.  Relgh,  466. 
Granite  Ry.  Co.  v.  Bacon,  411. 
Grant  r.  Ellicott,  150,  271. 
Grant  v.  Hunt,  175. 
Grant  r.  Kidwell,261. 
Grant  v.  Treadwell  Co.,  96. 
Grant  v.  Walsh,  248,  274. 
Graul  V.  Struizel,  305,  359. 
Graves  v.  Am.  Exch.  Bk.,  461. 
Graves  v.  Bank,  422. 
Graves  v.  Kellenbergen,  92. 
Graves  v.  Lllford,  394. 
Gray  v.  Bank  of  Kentucky,  271. 

XXXV 


TABLE    OF    CASES    CITED. 


References  ar 

Gray  v  Mllner,  16, 173. 

Gray  v.  Rowden,  23. 

Greathead  v.  Walton,  11. 

Greatlake  v.  Brown,  309. 

Green  v.  Borroughs,  429. 

Green  v.  Daveis,  17. 

Green  v.  Elson,  338. 

Green  v.  Louthain,  338. 

Green  v.  Raymond,  314, 

Green  v.  Russell,  502. 

Green  v.  Shepherd,  157. 

Greent'.  Skell,  88. 

Green  v  Wilkie,  264. 

Greenby  v.  Wilcocks,  195. 

Greene  v.  Thompson,  430. 

Greener  v.  Ulerey,  96. 

Greenfield  Bank  v.  Crafts,  86. 

Greenfield  Sav.  Bk.  v.  Stowell,  413. 

Greening  v.  Patten,  496. 

Greenough  v.  Smead,  168. 

Greenwell  v.  Haydon,  263. 

Greer  V.  Bush,  427. 

Gregg  V.  Beane,  467. 

Gregg  V.  Union  etc.  Nat.  Bk.,  266. 

Grlerson  v.  Mason,  138. 

Grieve  v.  Schweitzer,  499. 

Griffin  v.  Goff,  314. 

Griffith  V.  Cox,  410. 

Griffith  V.  Reed,  498. 

Griffith  V.  Sltgreaves,  255,  433. 

Griffiths  V.  Wells,  146. 

Grlggt'.  Gilmer,  439. 

Grlgsby  v.  Ford,  310. 

Grimball  v.  Marshall,  341. 

Grimes  v.  Hillenbrand,  146. 

Grimshaw  v.  Bender,  4. 

Grlmstead  v.  Brlggs,  408. 

Grlnman  v.  Walker,  364,  365. 

Griswald  v.  Davis,  151. 

Grlswald  v.  Waddlngton,  395. 

Grommes  v.  Sullivan,  96. 

Groth  V.  Gyger,  309. 

Oniguon  v.    Union   Trust   Co.   (in 
full),  324. 

Gulgnon  v.  Union  Trust  Co.,  313,  314. 

Guild  V.  Belcher,  146. 

Guild  V.  Butler,  432. 

Guild  V.  Gayer,  498. 

Gumz  V.  Glegling,  226. 

H 

Haber  v.  Brown,  386. 

Hackettstown  v.  Swackhamer,  102, 103. 

Hadden  v.  Rodkey,  201. 

Hagar  v.  Whitmore,  224. 

Hagerthyv.  Phillips,  217. 

Haggard  v.  Conkwright,  82. 

Haggland  v.  Stuart,  274. 

xxxvi 


e  to  Pages. 

Haines  v.  Dubois,  217. 

Haines  v.  Nance,  21,  34,  98, 177. 

Halbert  v.  Ellvvood,  22. 

Halch  V.  Burroughs,  146. 

Hale  V.  Andrews,  435. 

Hale  V.  Brown,  79. 

Hale  V.  Burr,  309,  386. 

Hale  V.  Danforth,  216,  217,  391 

Hale  V.  Hitchcock,  201. 

Hale  V.  Rice,  200. 

Hall  V.  Allen,  197. 

Hall  V.  Auburn  Turnpike  Co.,  95. 

Hall  V.  Bradbury,  88. 

Hall  V.  Cordell,  176,  179. 

Hall  V.  Crandall,  87,  97. 

Hallowell  v.  Curry,  362. 

Hall  V.  First  Nat.  Bk.,  178, 179,  183. 

Hall  V.  Flanders,  176. 

Hall  V.  Hickman,  36. 

Hall  I'.  Kimball,  497. 

Hall  V.  Lauderdale,  87. 

Hall  V.  Mobile  &c.  R.  R.  Co.,  203. 

Hall  V.  Smith,  435. 

HalU'.  Steele,  178. 

Hall  V.  Storrs,  494. 

Hall  V.  Toby,  24. 

Hallowell  V.  Curry,  318. 

Hallowell  Nat.  Bk.  v.  Marston,  389. 

Ilalsted  V.  Calvin,  251. 

Hamilton  v.  Brooks,  SO. 

Hamilton  v.  Hooper,  407,  408,  410. 

Hamilton  v.  Johnston,  613. 

Hamilton  v.  Marks,  257,  278. 

Hamilton  v.  Vought,  257,  270. 

Hamilton  v.  Winona  Salt  Ac.  Co.,  468. 

Hammett  v.  Brown,  22. 

Ham  met  1 1\  True  worthy,  391. 

Hammond  v.  Varian,  86. 

liamor  v.  Moore,  205. 

Hance  V.  Miller,  431. 

Handy  v.  Sibley  (in  full),  295. 

Handyslde  V.  Cameron,  13,  84. 

Hanger  v.  Abbott,  82. 

Hanks  I'.  Brown,  145. 

Hanerw.  Patterson,  226. 

Hapgood  V.  Pol  ley,  148. 

Harbison  v.  Bank  of  Indiana,  274. 

Hardie  v.  Mills,  201. 

Hardy  v.  First  Nat.  Bk.,  269. 

Hardy  v.  Waters,  77. 

Harger  v.  Worrall,  145,  273. 

Harkerv.  Anderson,  465. 

Harlan  r.  Ely,  495. 

Harper  v.  Stroud,  410. 

Harper  r.  Worrall,  191. 

Harrington  v.  Brown,  149. 

Harrington  v.  Butte  &  B.  Min.  Co.,  268. 

Harris  v.  Brooks,  432,  433. 

Harris  v.  Carmody,  255. 


TABLE    OF    CASES    CITED. 


References  are  to  Pages. 


Harris  r.  Clark,  310. 

Harris  v.  Coleman  &  Ames&c.  Co.,  98. 

Harris  r.  Johnston,  504. 

Harris  v.  Lewis,  2-t. 

Harris  v.  Robinson,  386. 

Harris  v.  United  States,  104. 

Harrison  I'.  Crowder,  317. 

Harrison  v.  Harrison,  52. 

Harrison  v.  Nicollet  Nat.  Bk.,  460. 

Harrison  v.  Rasciic,358. 

Harrison  i'.  Trader,  383. 

Harrison  I'.  Wright,  472. 

Harrop  v.  Fisher,  291,  292. 

Harsh  v.  Klepper,  407. 

Hartv.  Bridge  Co.,  451. 

Hart  V.  Eastman,  359. 

Hart  V.  Harrison  Wire  Co.,  34. 

Hartv.  McLellon,  866. 

Hart  V,  Mo.  &c.  Ins.  Co.,  96. 

Hart  V.  Taylor,  25. 

Hartford  Bk.  v.  Barry,  316. 

Hartford  Bk.  v.  Siedman,  306,  362. 

Hartleys.  Case, 371. 

Hartman  v.  Shaflfer,  143. 

Harvey  v.  Cane,  13. 

Harvey  v.  Irvine,  98. 

Harvey  v.  Nelson,  390. 

Harzfeld  v.  Converse,  492,  493. 

Hasbrook  v.  Palmer  (In  fall),  54. 

Hasey  V.  White  Pldgeon  Co.,  172. 

Haskell  I'.  Boardman,  362. 

Haskell  r.  Brown,  196. 

Haskell  v.  Champion,  410. 

Haskell  v.  Jones,  271. 

Haskell  r.  Mitchell,  202,  291,  292. 

Hastings  f.  DoUarhlde,  77. 

Hatch    V.  Johnson  Loan  &  T.  Co.,  248, 

265. 
Hatch  r.  Searles,  252. 
Hatchett  r.  Molton,439. 
Hately  V.  Pike,  98,  224. 
Hathcock  V.  Owen,  17, 197. 
Hatlcy  V.  Jackson,  389. 
Haven  v.  Grand  Junction  R.  R.  Co.,9!i. 
Hawkes  v.  Plillllim,  149,  427. 
Hawkey  V.  Borwick,347. 
Hawkshaw  v.  Parkins,  457. 
Hay  r.  Green,  195. 
Hay  V.  Jackele,  272. 
Haydenv.  Goodnow,  409. 
Haydenv.  Weldon,  224. 
Haydock  v.  Lynch,  144. 
Hayes  v.  Matthews,  412. 
Hayes  v.  Ward,  434,  457. 
Ilaynesr.  Blrks,  363. 
Hays  r.  Citizens'  Sav.  Bk.,  339. 
Hnys  r.  Morgan,  404. 
Hay  ward  r.  French,  90,  92. 
Hayward  v.  Pilgrim  Society,  95. 


Haywood  v.  Haywood,  80. 

Hazard  i\  Grlswold,  255. 

Hazard  v.  Spencer,  311. 

Head  V.  Cole,  272. 

Heard  v.  Dubuque  Co.  Bank,  429. 

Hcartt  V.  Rhodes,  465. 

Heath  v.  Achey,503. 

Heath  v.  Silverthorn  Mining  Co.,  154. 

lleaton  v.  Meyers,  133. 

Ilebcrle  v.  O'Day,  176. 

Hecht  V.  Batcheller,  216. 

Hedges  v.  Sealy,  291. 

Hedley  v.  Balnbrldge,  91. 

Heenan  v.  Nash,  93, 173. 

Heffron  v.  Gage,  330. 

Hcgeler  v.  Comstock,29. 

Hegeman  v.  Moon, 9. 

Helner  v.  Dawson,  256. 

Heist  V.  Hart,  271. 

Heifer  t'.  Alden,  36. 

Hemmelman  v.  Hotallng,  470, 

Hemmenway  v.  Stone,  411. 

Hemmlngway  v.  Matthews,  80. 

Hendershot  V.  Neb.  N.  Bk.,  363. 

Henderson  v.  Bondnrant,2.52. 

Hendrie  v.  Kinnear,  225. 

Henrietta  Xai.  Bank  v.  State  Nat. 

Bank  (in  full),  473. 
Henrietta  Nat.   Bk.  v.    State  Nat.  Bk., 

463. 
Henry  i\  Cohnan,  60,  67. 
Henry  v.  Conley,  504. 
Henry  v.  Ileeb,  86. 
Henschcl  v.  Mahler,  27. 
Hensel  v.  Chicago  etc.  R.  R.  Co.,  40, 
Henshawr.  Root,  398. 
Hepburn  v.  Griswold,  50O. 
Ilereth  v.  Merchants'  Nat.  Bk.,  258. 
Herrlck  I'.  Baldwin,  385. 
Herrlck  v.  Woolvcrton,  266. 
Herrimun  i<.  Shonion,501. 
Herring  v.  Woodhull,  213,  218,  419. 
Hersey  v.  Flliott,  82. 
Hervcy  r.  Harvey,  410,  418. 
Hervey  r-.  Smith,  413. 
Hibbard  v.  Russell,  377. 
Hlblerr.  Shipp,  434. 
Hicks  r.  Hinde,  140,  141. 
Higglns  V.  RJdgway,269. 
Hlgglnsf.  Willis,  80. 
Highland  r.  Dresser,  427. 
Ilighniore  v.  Primrose,  35. 
Hlghsmlih  f.  .Martin,  248. 
Illldeburn  t-.  Turner,  342. 
Hlllr.  Alexander,  197. 
Hill  V.  Banister,  104. 
mil  1-.  Dunham,  11. 
Hill  t'.  Martin,  393. 
Hillf.  Reave,  403. 

xxxvii 


TABLE    OF    CASES    CITED. 


References 

Hill  V.  Shields,  263. 
IIill  V.Todd.  35. 
Hills  V.  Bannister,  12'2. 
Hills  V.  Place,  34,  180,  303,  304. 
Hinckley  v.  Union  Pac.  R.  R.  Co.,  263. 
nines  V.  Allely,  160. 
Hinkley  v.  Fourth  Nat.  Bk.,  211. 
Hirschfeldcr  v.  Lacey  Ac.  Mfg.  Co.,  369. 
Hirshfleld  v.  Ft.  Worth  Nat.  Bk.,  316. 
Hirst  V.  Brooks,  265. 
Hitchcock  V.  Hogan,  316. 
Hoag  V.  Greenwich,  103. 
Hoare  v.  Cazenove,  182. 
Hobbs  V.  Chemical  Nat.  Bk.,  344. 
Hobbs  V.  Straine  (In  full),  404. 
Hobbs  V.  Straine,  365,  373,  392. 
Hobson  V.  Davidson,  503. 
Hobson  V.  Hassett,  152. 
Hodges  V.  Gait,  368. 
Hodges  V.  Schuler,  30,  370. 
Hodson  I).  Eugene  Glass  Co.,  274. 
Hoester  v.  Sammelmann,  353. 
Hoffman  v.  Bank  of  M.lwaukee,  145,  147, 
166,  182,  183,  191,  264. 

Hoffman  v.  Foster,  264. 

Hoffman  V.  Ilolllngsworth,  305,  386. 

Hoffman  v   Smith,  383. 

Hogan  V.  Moore,  255,  264. 

Hogarth  v.  Wherley,84. 

Hogue  V.  Davis,  217. 

Holbrock  v.  Camp,  225. 

Holbrock  v.  Payne,  178. 

Holcomb  V.  Beach,  197. 

Holcomb  V.  Wyckoff,  261. 

Holden  v.  Bank,  124. 

Holden  v.  Bloxum,  93. 

Holddworth  v.  Hunter,  5,  6. 

Holland  v.  Hatch,  412,  418.       - 

Holland  v.  Johnson,  434. 

Hollen  V.  Davis,  33,  54. 

Holloway  v.  Porter,  34. 

Holmes  v.  Bemls,  150. 

Holmes  v.  First  Nat.  Bk.,  216. 

Holmes  v.  Hooper,  222. 

Holmes  v.  Lyklns,  504. 

Holmes  v.  Preston,  226. 

Holmes  v.  Railway  Co., 513. 

H  limes  V.  Roe,  466,467. 

Holmes  v.  Trumper,  413. 

Holmes  V.  Williams,  146. 

Holt  V.  Bodey,  15. 

Holt  V.  Ross,  183. 

Holton  V.  Hubbard,  268. 

Holtz  V.  Boppie,  168. 

Holzworth  V.  Koch,  154. 
Hood  V.  Hallenback,  140. 
Hoodless  V.  Reld,  502. 
Hookr.  Pratt,  34,221. 
Hooper  v.  Williams,  438. 

xxxviii 


are  to  Pages. 

Hoover  v.  Glasscock,  389. 

Hoover  v.  McCormick,  148,  389. 

Hope  r.  Barker,  29. 

Hopkins  v.  Hawkeye  Ins.  Co.,  254. 

Hopkins  V.  Page,  396. 

Hopkinson  f .  For8ter,473. 

Hopper  V.  Eiland,  113. 

Hopps  V.  Savage,  174. 

Horner  v.  Horner  (in  full),  73. 

Horst  V.  Wagner,  407. 

Horton  v.  Bayne,  270. 

Horton  v.  Garrison,  140. 

Horstman  v.  Henshaw,  182, 183. 

Hotchkiss  V.  Fitzgerald  &c.  Plaster  Co., 

262. 
Hotchkiss  V.  Moskey,  23. 
Houck  V.  Graham,  436. 
Hough  V.  Insurance  Co.,  492. 
Hougb  V.  Loring,  178. 
Houghton  V.  Ely,  225. 
Houghton  V.  First  Nat.  Bk  ,  87. 

Houghton  V.  Francis,  57,  412. 

Housatonic  Bk.  v.  Laflin,  371. 

House  V.  Adams,  166,  881,  382,  395. 

House  V.  Grant,  204. 

Hovey  v.  Hobson,  78. 

Hovey  v.  Magill,  98. 

Howards.  Chapman,  494. 

Howard  v.  Hinckley  &  E.  Iron  Co.,  152. 

Howard  v.  McDonough,  404. 

Howard  v.  Palmer,  21. 

Howard  Bank  v.  Carson,  360. 

Howe  r.  Bradley,  365. 

Howe  V.  Hartness,  266. 

Howe  V.  Merrill,  214,  226. 

Howe  V.  Taggart,  410. 

Howenstein  v.  Barnes,  29,  60. 

Howland  v.  Adrain,  370. 

Howland  v.  Edmonds,  265. 

Howzy  V.  Eppinger,  257. 

Hoxie  V.  Hodges,  148. 

Hoyt  V.  Lynch,  17. 

Hoyt  V.  Seeley,  464,  465,  469. 

Hubbard  v.  Chapin,  261. 

Hubbard  v.  Guernsey,  15.  217,  432. 

Hubbard  v.  Matthews,  309,  360,  381. 

Hubbard  i'.  Rankin,  2,54. 

Hudson  V.  Emmons,  28. 

Hudson  V.  Walcott,  237. 

Hnertenaatte  v.  Morris  (in full),  188. 

Huffakerv.  Nat.  Bk.  of  Montlcello,  318, 
343. 

Hughes  V.  Bowen,392. 

Hughes  V.  Frum,  196. 

Hughes  r.  Kellogg,  355. 

Hughes  V.  Kiddell,213. 

Hughes  V.  Nelson,  82,  293. 

Hughes  V.  Wheeler,  143. 

Huguley  v.  Morris,  91. 


TABLE    OF    CASES    CITED. 


References  are  to  Pa^es. 


Haling  v.  Hugg,  21. 

Hull  V.  Meyers,  217. 

Huiner.  Watt,  360. 

Humphreys  Finch,  252. 

Humphrey  v.  Ultt,  435. 

Humphreys  v.  Crane,  408. 

Humphreys  v.  Gulllow,  409. 

Humphreys  v.  Wilson,  84. 

Humphreyville  i\  Culver,  197. 

Humphries  v.  Blcknell,  464,  466. 

Humphries  r.  Nix,  36. 

Hungerford  v.  CBrien,  427,  431. 

Hunt  V.  Adams,  429,  431. 

Huntv.  Chapln,  91. 

Hunt  V.  Gray,  407. 

Huntv.  Hunt,  204. 

Hunt  V.  Johnson,  145. 

Hunt  r.  Knickerbocker,  146. 

Hunt  V.  Mason,  145,  148. 

Hunt  V.  Maybie,  309. 

Hunt  I".  Nevers,  304. 

Hunt  V.  Railway  Co.,  137. 

Hunt  V.  Wadlelgh,  305,  393. 

Hunter  r.  Hennlnger,  196. 

Hunter  i\  Jeflfery,  19. 

Hunter  r.  Parsons,  145. 

Hunter  f.  Wood,  304. 

Hunting  v.  Emnicrt,  180. 

Huntington  v.  Harvey,  392. 

Huntington  v.  Wellington,  429. 

Hnrlbutv.  Hall,  407,  410. 

HurtiJ.  Ford,  38. 

Huse  V.  Flint,  503. 

Huse  V.  Hamblin,  32,  503. 

Huse  V.  McDanlcl,  503. 

Hussey  i".  Winslow,  23. 

Huston  V.  First  Nat.  Bk.,  214. 

Huston  V.  Young,  11. 

Hatchings  v.  Low,  197. 

Hutchinson  r.  Brown,  40. 

Hutchinson  v.  Simon,  213. 

Hutchinson  v.  Crutcher,  313,  385. 

Hyde  v.  Goodnow,  38. 

Hyman  v.  Am.  Elec.  Forge  Co.,  248. 

Hypes  V.  Griffin,  88. 


Ilsley  V.  Jones,  175, 179. 
Imperial  Land  Co.,  In  ro,  36. 
Importers  etc.  Nat.  Bk.  i\  Llttel,  260. 
Importers'  &  Traders'  Nat.  Bk.  v.  Shaw, 

360,  373. 
Indiana  etc.  R.  R.  Co.  v.  Davis,  100. 
Indig  r.  Nat.  City  Bk.,  468. 
Industrial  Bk.  of  Chicago  v.  Bowes,  469. 
Industrial  Tr.  &  Sav.  Co.  v.  Weakley, 

46S. 
IngersoU  r.  Martin,  143,  145, 


Innes  v.  Munro,  68. 
In  re  Armstrong,  178. 
In  re  Parisian   Cloak  &  Suit  Co.'a  Es- 
tate, 311. 
Insurance  Co.  v.  Bruce,  256. 
Insurance  Co.  v.  Grant,  114. 
Insurance  Co.  i-.  Stanford,  495. 
Insurance  Co.  r.  Wright,  446. 
International  Bank  v.  Bowen,  498. 
International  Trust  Co.  v.  Wilson,  269. 
Iowa  Valley  State  Bk.  v.  Slgstad,  389. 
Irby  V.  B lain,  258,  262. 
Ireland  v.  Kip,  369. 
Irickr.  Black,  435. 
Iron  Mountain  Bk.  v.  Murdock,  410. 
Irvine  v.  Adams,  432,  434. 
Irving  Bank  i\  Alley,  20. 
Irving  Bank  v.  Wetherald,  175,  183,  46S. 
Isbell  V.  Lewis,  364,  305,  385,  386,  392. 
Israel  v.  Gale,  1.10,  152. 
Ives  V.  Bank,  54. 
Ives  V.  Farmers  Bk.,  40, 410. 
Ivory  V.  Bk.  of  the  State,  460. 
Ivory  V.  Michael,  252. 


Jaccard  r.  Anderson,  390. 
Jacks  V.  Darrin,  469. 
Jackson  r.  First  Nat.  Bk.,272. 
Jackson  v.  Gumear,  78. 
Jackson  v.  Hardin,  348. 
Jackson  v.  Love,  307. 
Jackson  v.  Meyers,  36,  99. 
Jackson  v.  Packer,  304,  311. 
Jackson  v.  Richards,  393. 
Jackson  v.  Wood,  15. 
Jacobs  V.  llifcbell  (In  full),  70. 
Jacoby-Micholas  Co.,  In  re,  95. 
Jjicqnin  v.  Warren,  23. 
Jaffray  v.  Brown,  225. 
Jaffray  v.  Crane,  435. 
Jaffray  r.  Krauss,  305. 
Jaggar  Iron  Co.  v.  Walker,  503. 
James  v.  Chalmers,  222. 
Jameson  v.  Jameson,  266,  267. 
Janscn  v.  Grirashaw,  6()3,  504. 
Jacqua  v.  Montgomery,  256. 
Jarlngcn  v.  Stratton,  359. 
Jarvis  V.  Garnelt,  312,  342. 
Jarvls  r.  St.  Croix  Mfg.  Co.,  366. 
Jarvis  V.  WIlBon.  22,  166, 176, 183. 
Jefts  r.  York,  87,  97,  98. 
Jenkins  r.  While,  391. 
Jenkins  r.  Wilkinson, 200. 
Jcnne  i'.  Ward,  178. 
Jeiinln^M  v.  Totid  (In  full),  275. 
Jennings  v.  Todd,  270. 
Jenuison  r.  Parker,  307. 

xxx'ix 


TABLE    OF    CASES    CITED. 


References  are  to  Pages. 


Jerome  v.  McCarter,  82. 

Jcssup  V.  Stenrer,  89. 

Jillsonv.  11111,304. 

Joest  I'.  Williams,  79. 

John  V.  City  Nat.  Kank,  313. 

Johnson  v.  Bank  of  U.  S.,  411. 

Johnson  v.  Blanks,  200. 

Johnson  v.  Brown,  315,  466. 

Johnson  v.  Carpenter,  203. 

Johnson  v.  Clark,  ITS. 

Johnson  v.  Cocks,  370. 

Johnson  v.  Glover,  511. 

Johnson  v.  Ilarlh,  359,  376. 

Johnson  v.  Ha:  vc> ,  436. 

Johnson  v.  n<.agan,66. 

Johnson  v.  Jobnson,  493. 

Johnson  v.  Laird,  55. 

Johnson  v.  Mangum.lOT. 

Johnson  v.  McMurray,  273,  274. 

Johnson  v.   Mitchell,  197,    212,  219,    221, 

429,  433. 
Johnson  v.  Parsons,  389,  390. 
Johnson  v.  Ramsey,  217. 
Johnson  v.  Smith,  98. 
Johnson  v.  Suburban  Realty  Co.,  270. 
Johnson  v.  Way,  2o7. 
Johnson  Co.  Sav.  Bk.  v.  Lowe,  390,  391. 
Johnston  v.  Allen,  501. 
Johnston  v.  Dickson,  144. 
Johnston  v.  jNfay,  408. 
Johnston  v.  McDonald,  225. 
Johnston  v.  Mills,  426. 
Johnston  i\  Speer,  196. 
Jones  1'.  Beriyhill,  271. 
Jones  V.  Broadhurst,  498. 
Jones  V.  Brown,  24. 
Jones  V.  Burden,  274. 
Jones  V.  Council  Bluffs  &c.  Bk.,  179. 
Jones  V.  Crosthwalte,  234. 
Jones  V.  Dow,  429. 
Jones  V.  Fales,  06,  212,  318. 
Jones  V.  Fort,  501. 
Jones  V.  lleiligcr,  338,  465,  505. 
Jones  V.  Kuhn,  427. 
Jones  V.  Le  Tombe,  100. 
Jones  V.  Lewis,  367. 
Jones  V.  Radlitz,  29. 
Jones  V.  Ryde,233,  234: 
Jones  V.  Sales.  55. 
Jones  V.  Shapers,  220. 
Jones  v-  Shaw,  40. 
Jones  V.  Simpson,  28. 
Jones  V.  Thayer,  429. 
Jones  V.  Warden,  387. 
Jones  V.  Wilson,  155,  247,  262. 
Jordan  v.  Dobbins,  427. 
Jordan  v.  WheeK  r,  171, 186. 
Joseph  V.  Natl.  Bank,  252. 
Joslyn  V,  ColUnson,  149. 

Xl 


Joyner  r.  Turner,  305. 
Judah  V.  Harris,  55. 
Juillard  v.  Chaffee,  138. 
Juillard  v.  Green  man,  ,f)00. 
Juniata  Bk.  v.  Hale,  358,  369. 
Junge  V.  Bowman,  88. 
Junker?'.  Rush,  435. 
Jury  v.  Barker,  25. 


Kahm  r.  King  Bridge  Mfg.  Co.,  145. 
Kahn  r.  Wnllon,  73,  463. 
Kaiser  r.  First  Nat.  Bk.,  270. 
Kaiser  r.  U.  S.  Nat.  Bank,  155. 
Kalamazoo  Nat.  Bk.  v.  Clark,  254. 
Kannady  v.  Lambart,  439. 
Kaufman  v.  Barringer,  177. 
Kavanaugh  v.  Farmers'  Bk.  of  Maltland, 

461. 
Kayser  v.  Hall,  20. 
Kayser  r.  Hodopp,  150. 
Kearney  v.  King,  5. 
Keck  V.  Brewing  Co.,  136. 
Keene  i'.  Beard,  4.59,  464. 
Keith  V.  Jones,  54. 
Kelley  !•.  Greenough,  176. 
Kelley  v.  Hemingway,  24. 
Kelley  v.  Whitney,  203,  215,  257,  268,  27L 
Kellogg  V.  Curtis,  145,  274. 
Kellogg  V.  Schnaake,  263. 
Kelly  V.  Bronson,  27. 
Kelly  V.  Brown,  465. 
Kelly  V.  Bnrrongh  (in  full),  160. 
Kellman  v.  Calhoun,  273. 
KclseaiJ.  Fletcher,  403. 
Kelsey  v.  McLaughlin,  213. 
Kelso  V.  Frye,  67,  279. 
Kempson  v.  Sanders,  234. 
Kendall  v.  Galvin,  114. 
Kennedy  v.  Bank,  416. 
Kennedy  v.  Chapin,  497. 
Kennedy  v.  Evans,  464. 
Kennedy  v.  Knight,  98. 
Kenner  v.  Creditors,  174. 
Kenton  Ins.  Co.  v.  McClellan,  80. 
Kenworth  v.  Sawyer,  80. 
Kenyon  v.  Williams,  88. 
Keohane  v.  .Smith,  203. 
Kephart  v.  Butcher,  235. 
Kern  v.  Von  Phul,  389, 
Kernohan  v.  Durham,  263. 
Kcrrick  v.  Stevens,  308. 
Kesslerv.  Hall,  106. 
Ketchum  v.  Buffalo,  102. 
Kidder  v.  Mcllhenny,  203. 
Kilbreath  v.  Gaylord,  267. 
Kiley  v.  Frosie,  131. 
Kilgore  v.  Buckley,  371. 


TABLE    OF    CASES    CITED. 


References 

Kilkelly  v.  Martin,  410. 

Killby  V.  Rochossen,  377. 

KiUian  v.  Ashley,  225. 

Klllough  V.  Alford,  500. 

Kimball  v.  Blttner,  87. 

Kimball  V.  Bryan,  382. 

Kimball  Co.  v.  Mellon,  26. 

Kimbro  v.  BuUett,  90,  91. 

Klncaid  v.  HlgRlns,  27. 

King  V.  Baldwin,  435. 

King  V.  Crowell,  312,  318. 

King  V.  Fleming,  11, 12,  39. 

Kingr.  Holmes,  313. 

Klngr.  Hunt,  410. 

King  V.  Hurley,  370. 

King  V.  Lambton,  114. 

King  V.  Ritchie,  244. 

Kingsbury  v.  Wall,  24. 

Kingston  Sav.  Bk.  v.  Bosserman,  408. 

Kinney  v.  Flynn,  17. 

Kinney  v.  Kruse,  204. 

Kinsley  v.  Robinson,  382,  383. 

Kinsman  v.  Blrdsall,  148. 

Klnyon  v.  Stanton,  469. 

Klnyon  v.  Wahlford,  250. 

Kirk  V.  Dodge  Co.  Mut.  Ins.  Co.,  25, 

Kirkman  v.  Bank,  114. 

Klrkman  v.  Bank  of  America,  38. 

Kirkman  v.  Benham,  106. 

Kirkman  v.  Hamilton,  439. 

Klrkpatrick  v.  Hawk,  434. 

Klrkpatrlck  v.  I'uryear,  4(i9. 

Klrschner  v.  Conklln,  216,  217. 

Klrtland  v.  Wanzer,  338. 

Kittle  V.  Delamater,  211,  263. 

Kleckamp  v.  Meyer,  309. 

Klein  V.  Currier,  427. 

Klein  V.  Kelser,  212. 

Klelnman  v.  Boernsteln,  365. 

Klochenbaum  r.  Plerson,  370. 

Klopferi'.  Levi,  183. 

Klosterman  v.  Kage,  392. 

Knapp  V.  Hoboken,  102,  104. 

Knapp  V.  Smith,  109. 

Knickerbocker  L.  Ins.  Co.  v.  Pendleton, 

383. 
Knight  V.  Hullbcrt,  13. 
Knight  V.  Putnam,  259. 
Knott  f.  Tldyman,269. 
Knott  f .  Vcnable,  107,  315,  308. 
Knaus  r.  Major,  428. 
Knowles  V.  Kiiowleet  (In  full),  158. 
Knowlton  v.  Bradley,  105, 
Knowlton  v.  Cooley,  22. 
Knox  V.  Clifford,  11. 
Knox  V.  Keeslde,  180. 
KnoxvUle  Nat.  J!k.  v.  Clark,  413. 
Koch  r.  Howoll,  178. 
Koulg  ('.  Bayard,  181. 


are  to  Pages. 

Koons  V.  Davis,  279. 

Kost  v.  Bender,  265. 

Kountz  V.  Kennedy,  407. 

Kramer  v.  Sandford,  388. 

Krouskop  V.  Shoutz,  68. 

Kragman  v.  Soule,  435. 

Krumm  v.  Beach,  109. 

Kuhns  V.  Gettysburg,  Nat.  Bank,  274. 

Kuntzr.  Tempcl,316. 

Kyle  V.  Thompson,  308. 


Labodlole  v.  Landy,  382. 

Lacoste  v.  Harper,  384. 

Lacy  V.  Sugarman,  82. 

La  Due  V.  First  Nat.  Bk  ,  266. 

Lallin  R.  R.  Co.  v.  Nusheimer,  176. 

La  Grange  Inst.  v.  Anderson,  77. 

Laird  v.  Davidson,  211. 

Laird  v.  Warren,  57. 

Lamb  v.  Brlggs,  427. 

Lamb  v.  Matthews,  197,  499, 

Lambert  i'.  Clewlcy,  154. 

Lambert  v.  Ghiselln,  386. 

Lambert  v.  Sandford,  432. 

I.amUin  v.  Kdgerly  (in  full),  372. 

Lamkln  v.  Edgerly,  366. 

Lamkln  i-.  Nye,  315. 

Lampet's  Case,  195. 

Lancaster  Co.  Bk.  v.  Moore,  78. 

Lancaster  Nat.  Bk.  v.  Garber,  257. 

Lancaster  Nat.  Bk.  v.  Taylor,  202,  262. 

Lancey  v.  Clark,  496. 

Land  Co.  v.  Rhodes,  327. 

Landon  v.  Bryant,  391. 

Lane  v.  Bank  of  West  Tennessee,  369. 

Lane  v.  Krekle,  19,  50. 

Lane  v.  Stacy,  217. 

Lang  I'.  Smyth,  5. 

Lange  v.  Koline,  31. 

Langerberger  r.  Kroegcr,  318. 

Langford  v.  Varner,  152,  247. 

Lanier  v.  Union  Mfg  etc.  Tr.  Co.,  248. 

Lank  v.  Morrison,  2;4. 

Lanussc  v.  Barker,  426. 

Lapeyre  v.  Wcaks,  104. 

Large  v.  Kohne,  55, 

Larsen  v.  Breene,  477. 

Lary  v.  Young,  391. 

Latham  v.  Houston  Flour  Mills,  226. 

Lathropr.  Donaldson,  273. 

Laughlin  v.  Wright,  305. 

Lavellette  v.  Wendt,  267. 

Law  V.  Crawford,  30. 

Lawrence  v.  Dobyns,  215,  £05,  318,  347. 

Lawrence  v.  Dougherty,  30. 

Lawrence  r.  Fusscll,  221. 

Lawrence  v.  Hammond,  382. 

xli 


TABLE    OF    CASES    CITED. 


References 

Lawrence  v.  McCalmont,  520. 

Lawrence  v.  Miller,  386. 

Lawrence  v.  Ralston,  392. 

Lawrence  v.  Russell,  308. 

Lawson  v.  Hank,  363,  376,  377. 

Lawson  v.  Lovejoy,  77. 

Lay  V.  Wiseman,  "261. 

L.Rzier  \.  Horan  (In  lull),  319. 

Lazier  v.  Horan,  304. 

Lea  V.  Branch  Bank,  438. 

Lea  V.  Cassen,  148. 

Lea  V.  Glover,  265. 

Leach  v.  Funk,  263. 

Leather  Man  Nat.  Bk.  v.  Morgan,  414. 

Leavitt  v.  Putnam,  219,  222,  359. 

Lebanon  &c.  Road  Co.  v.  Adair,  95. 

Ledwlch  v.  McKim,  251. 

Lee  V.  Alexander,  408. 

Lee  V.  Dick,  427. 

Lee  V.  M.  E.  Church,  140. 

Lee  V.  Pile,  260. 

Lee  V.  Turner,  263. 

Leeds  v.  Hamilton  Paint  etc.  Co.,  389. 

Lefflngwell  v.  White,  391. 

Lef tley  r.  Mills,  341. 

Legal  Tender  Cases,  500. 

Legs  V.  Legg,  80. 

Legg  V.  Vinal,  318,  344,  370. 

Lcglo  r.  Staples,  28. 

Lehman  v.  Jones,  386. 

Lehman  Bros.  v.  McQueen,  519, 

Leiber  v.  Goodrich,  30. 

Leitch  V.  Wells,  272. 

Leland  v.  Parriott,  66,  222. 

Lennon  v.  Brainard,  500. 

Lenox  v.  Leverett,  362. 

Leonard  v.  Gary,  391. 

Leonard  v.  Leonard,  500. 

Leonard  v.  Olsen,  266,  357,  383,  385.  386, 

466,  469. 
Leonard  v.  Phillips,  412. 
Leonardo.  Swentzer,  148. 
Leonard  v.  Vredenburgh,  428,  438,  439. 
Leslie  v.  Bassett,  155. 
Lesser  v.  Schalze,  22. 
Lester  v.  Given,  472. 
Lester  v.  Rogers,  410. 
Lester  r.  Webb,  116,  117. 
Letson  v.  Dunham,  384. 
Lettley  v.  Mills,  306. 
Lcverone  v.  Hildreth,  148. 
Lewis  V.  Brehme,  377. 
Lewis  V.  Wilson,  35. 
Libby  v.  Pierce,  360. 
Lieber  &  Colsin  v.  Goodrich,  55. 
Liebschert'.  Kraus,  97. 
Llggitt  V.  Weed,  172. 
Light  V.  Powers,  179. 
Lime  Rock  Bank  v.  Hewett,  364. 

xlii 


are  to  Pages. 

Lime  Rock  Bank  v.  Mallett,  68. 

Lincoln  etc.  Bk.  v.  Page,  318. 

Lindeman  v.  Guldin,  361. 

Lindenberger  v   Bcal,  366. 

Lindlcy  v.  First  Nat.  Bk.,  179. 

Lindsay  v.  Price,  175. 

Lindus  v.  Melrose,  98. 

Lintz  V.  Howard,  2T2. 

Litchfield  v.  Flint,  107. 

Littauer  v.  Goldman,  199. 

Little  V.  Mills,  273. 

Little  V.  Phoenix  Bk.,466. 

Little  V.  Rogers,  438. 

Littler.  Slacklord,22. 

Littledale  v.  Maberry,  342. 

Littlefield  tJ.  Shie,80. 

Litchfield  Bank  r.  Peck,  262. 

Little  Rock  Trnst  C ».  t.  Martin 

(in  full),  415. 
Little  Rock  Trust  Co.  v.  Martin,  410. 
Livingston  v.  Gaussen,  107. 
Lloyd  V.  Keach,  259,  260,  261. 
Lloyd  V.  McGarr,  344. 
Lloyd  V.  Rowland,  173. 
Lobdell  V.  Baker,  234. 
Lockwood  V.  Crawford,  167,  170,  171,  318, 

335,  359,  427. 
Lomer  v.  Meeker,  161. 
Long  V.  Campbell,  226. 
Long  V.  Mason,  409. 
Loomls  V.  Ruck,  255. 
Loose  V.  Loose,  377. 
Los  Angeles  N.  B.  v.  Wallace,  305. 
Losee  v.  Bissell,  201,  262. 
Losee  v.  Dunkin,  266. 
Louisiana  State  Bank  v.  Dumartralt,36L 
Louisiana  State  Bank  v.  Ellery,  360. 
Louisville  Mfg.  Co.  v.  Welch,  431. 
Loux  V.  Fox,  467. 
Lovejoy  v.  Spafford,  20. 
Lovejoy  v.  Whipple,  36,  39. 
Lovell  V.  Hill,  23. 
Low  V.  Bliss,  29,  57. 
Lowenstein  v.  Bresler,  465. 
Lowman  v.  Auberry,  409. 
Lowry  V.  Steele,  389. 
Loyd  V.  McCaffrey,  7. 
Lubbering  v.  Kohlbrecher,  408. 
Lucas  V.  Ladew,  167,  315. 
Lucas  V.  Pinney,  96. 
Lucas  V.  Pitney,  95. 
Luce  V.  Shaff,  11. 
Lugrue  v.  Woodruff,  178. 
Lundberg  v.  N.  W.  Elevator  Co.,  152. 
Luning  V.  Wise,  211. 
Lyle  V.  Burke.  197. 
Lynch  v.  Bank,  293, 
Lynch  v.  Dodge,  79. 
Lynch  v.  First  Nat.  Bk.,  463. 


TABLE    OF    CASES    CITED. 


References 

Lynch  v.  Kennedy,  255. 
Lynch  v.  Mead,  212. 
Lynchburg  Nat.  Bk.  r.  Scott,  14<;. 
Lyons  v.  Miller,  233,234. 

M 

Maas  V  Montgomery  Iron  Works,  179. 

Macey  v.  Kendall,  150. 

MacFarland  v.  Pico,  31". 

Mackay  ^\  St.  Mary's  Church,  99. 

Mackintosh  v.  Wyatt,  457. 

Macloon  r.  Smith, 315. 

Magoun  f.  Walker,  344. 

Magruder  i\  Union  Bk.,  305,  309. 

Mahlu  V.  Kirby,  202. 

Mahoney  t'.  Ashlin,  5. 

Mahoney  Mining  Co.  v.  Anglo-Cal.  Bk. 

95. 
Main  i'.  Hilton,  20. 
Maine  Trust  &c.  Co.  v.  Butler,  219. 
Maitland  v.  Citizens  Nat.  Bank,  155,  300. 
Makepeace  i\  Harvard  College,  67. 
Makepeace  i\  Moore,  107. 
Maiden  Bk.  v.  Baldwin,  311. 
Malone  i\  Keener,  429. 
Manchester  v.  Van  Brunt,  372. 
Manchester  Bk.  v.  Fellows,  362. 
Mandeville  v.  Riddle,  439. 
Mandeville  v.  Welch,  35,  438. 
Manler  v.  Churchill,  157. 
Manlon  Gravel  Road  Co.  v.  Kesslnger, 

218. 
MaMn  V.  Bank,  285. 
Mann  v.  King,  85. 
Manncy  i-.  Colt,, 388. 
Manning  v.  Lyon,  393. 
Manning  v.  Maroney,  382. 
Manning  r.  McClure,  152,  155. 
Manson  v.  Felton,  79. 
Manufacturer's  Bk.  v.  Hazard,  385. 
Manufacturers'  Nat.  Bk.  v.  Continental 

Bk.,  243. 
Manufacturer's  &c.  Bank  f.  AVinship,93. 
Manufacturers  &  M.  Bk.  v.  Follett,  412. 
Manufacturing  Co.  v.  Bishop,  351. 
Manufacturing    Co.    i:    Wakelleld,   493, 

494 
Meany  r.  Beckman  Iron  Co.,  99. 
March  v.  Barnet,  499. 
Marine  Bk.  v.  Fulton  Bk.,24.i. 
Marlon  Xat.  Bk.  r.  Phillips  Adnir.,  358. 
Marion  etc.  R.  R.  Co.  v.  Hodge,  172. 
Market  &  Fulton  Nat.  IJk.  v.  Sargent,  251. 
Markey  v.  Carey,  26. 
Markham  v.  Hazen,  173,  ISl. 
Maikland  v.  McDaniel,  389,  391. 
Marks  V.  Boone,  362,  372. 
Marks  v.  Corey,  219. 


are  to  Pages. 

Marsh  v.  Gold,  91. 

Marsh  v.  Low,  166. 

Mar6h  v.  Marshall,  263. 

Marsh  v.  Maxwell,  377. 

Mar&h  v.  Small,  256. 

Marsh  v.  Thompson  Nat.  Bank,  92. 

Marshall  v.  Mitchell,  388. 

Marshall  v.  Russell,  39. 

Marskey  v.  Turner,  151,  222. 

Marston  v.  Allen,  203. 

Martin  r.  Bacon,  177. 

Martin  v.  Brown,  369. 

Martin  v.  Cole,  236. 

Martin  v.  Fewell,  135. 

Martin  v.  Grabinsky,  314. 

Martin  v.  Hazard,  35. 

Martin  v.  Ingersoll,  362,  363. 

Martin  v,  Marshall,  150. 

Martin  v.  Muncy,  150. 

Martin  v.  Perqna,  392. 

Martin  v.  Smith,  372. 

Martin  v.  Stone,  26,  143. 

Martin  v.  Webb,  131. 

Marvin  r.  McCullum,  36,  113. 

Marzettl  v.  Williams,  423. 

Mason  v.  Franklin,  169,  312. 

Mason  v.  Frick,  99. 

Mason  v.  Hyde,  38. 

Mason  v.  Morgan,  80. 

Mason  v.  Noonan,  223. 

Mason  i\  Pritchard,  387. 

Mason  v.  llumsey,  93. 

Maspero  v.  Pedesclaux,  361. 

Massachusetts  Bank  v.  Oliver,  361. 

Massey  v.  Blair,  25. 

Massey  r.  Citizens  Bldg.  Assn.,  96. 

Matheny  v.  Hughes,  272. 

Mathews  i'.  Dubuque  Ac.  Co.,  98. 

Malhewson  v.  Strafford,  361. 

Maihias  v.  Kirsh,  154. 

Matter  of  Brown,  459,  460,  469. 

Matteson  v.  Ellsworth,  407. 

Matteson  v  Morris,  143,  201. 

Matteson  v.  Moulton,  178. 

Matthews  v.  Allen,  392. 

Matthews  V.  Baxter,  79. 

Matthews  v.  Crosby,  145. 

Matthews  v   Dare,  504. 

Matthews  v.  Hamilton,  494. 

Matthews  v.  Ilaughton,  55. 

Matthleson  i:  McMahon,  78. 

Mauran  v.  Lamb,  499. 

Maury  v.  Coleman,  279. 

Maux  Ferry  Co.  v.  Branegan,  384. 

Maxwell  r.  Vansant,  11,  2*23. 

May  r.  Boisseau,  389. 

May  V.  Boisseau,  388. 

May  V.  t'ainpbell,  259. 

May  V.  City  Bank,  26. 

xliii 


TABLE    OF    CASES    CITED. 


References 

May  V.  Coffin,  385. 

May  V.  Hewett,  13,  88. 

May  v.  Kelly,  173. 

Mayr.  Miller,  12. 

May  V.  Sharp,  439. 

Mayberry  v.  Morris,  272. 

Mayer  v.  Chattahoochie  Nat.  Bk.,  472. 

Mayer  v.  Isaacs,  428. 

Mayer  v.  Thomas,  304. 

Mayes  v.  Kobinson,  27S. 

Mayhew  v.  Circkett,  457. 

Mayor  v.  Inman,  103. 

Mayor,  etc.  r.  Tenth  Nat.  Bk.,  124. 

Mayor  of  Xashville  v.  Ray,  102, 103. 

Mayor     of     Wetumpka    v.     Wetumpka 

Wharf  Co.,  102. 
Maze  V.  Helnze,  17. 
McAndrew  v.  Radway,  342. 
McAuliffe  V.  Reuter,  220. 
McBride  v.  Farmers'  Bank,  152. 
McCabe  v.  Caner,  152. 
McCall  V.  Tayler,  12. 
McCallum  lu  Driggs,  225. 
McCauley  v.  Gordon,  411. 
MeCarty  v.  Louisville  Banking  Co.,  271. 
McCarty  v.  Roots,  216,  217. 
McClaini;.  Weidemeyer,  81. 
McClanci'.  Fitch,  3«. 
McClelland  v.  McClelland,  148. 
McCormlck  v.  Eckland,  207. 
McCormick  r.  Railroad  Co.,  404. 
McCoy  V.  Farmer,  316. 
McCormick  v.  Trotter,  55. 
McCoy  V.  Lockwood,  252,  411. 
McCrary  v.  Slaughter,  91. 
McCone  v.  Belt,  370. 
McElarin  v.  Nesbit,  55. 
McElwain    v.  Merchants'    &    Farmers' 

Bank,  238. 
McElwee  v.  Metropolitan  Lumber  Co., 

503. 
McGavoch  v.  Whitfield,  104. 
McGee  v.  Prouty,15. 
McGee  V.  Riddlesbarger,  201. 
McGeorge  v.  Chapman,  385. 
McGoon  V.  Shirk,  500. 
McGrath  v.  Clark,  252,  410. 
McGregor  v.  Cleveland,  93. 
McGregory  v.  McGregory,  393. 
McGruder  v.  Bk.  of  Washington,  385. 
McGuire  v.  Calahan,  79. 
Mclntire  v.  Preston,  96. 
Mcintosh  V.  Lytle,  461. 
McKechine  v.  Ward,  434. 
McKee  v.  Boswell.  309. 
McKee  v.  Campbell,  436. 
McKee  v.  Hamilton,  93. 
McKinney  v.  Crawford,  305. 
McKnightr.  Wheeler,  211. 

xliv 


are  to  Pages. 

McLaren  v.  Watson's  Exrs.,  429. 
McLean  v.  Nicheu,24. 
McMinn  v.  Richmond,  76. 
McMonigal  v.  Brown,  237,  389,  391. 
McMorran  v.  Murphy,  503. 
McMnrchey  v.  Robinson,  314,  316,  338. 
McMurtrie  v.  Jones,  365. 
McNaughtr.  McClaughey,  149. 
McXell  r.  Chamber  of  Commerce,  116. 
McNeil  V.  Shober  &c.  Co.,  98. 
McNeil  V.  Wyatt,  359. 
McPherson  v.  Bondreau,  262. 
McPherson  r.  Weston,  211,  229. 
McPherson  Nat.  Bank  r.  Velde,  199, 
McPhetres  r.  Holley's  Ex'r,  377. 
McQuade  v.  Rosccrans,  73. 
McSherry  v.  Brooks,  222. 
McSparran  v.  Neeley,  11,  79. 
McVeigh   v.    Bk.  of  Old  Dominion,  82, 

382. 
McWilliams  v.  Mason,  433. 
McWilliams  v.  Webb,  196. 
Md.  Fertilizing  Co.  v.  Newman,  29. 
Mead  i\  Merchants'  Bk.,  97,  154, 183. 
Mead  v.  Parker,  451. 
Mead  r.  Small,  498. 
Mead  v.  Young,  49. 
Meador  r.  Dollar  Savings  Bank,  24. 
Meads  v.  Merchants'  Bk.  of  Albany,  463. 
Mechanics'  Bank  v.  Bank  of  Columbia 

87. 
Mechanics'  &c.  Bank  v.  Crow,  152,  27r 
Mechanics'  Bk.  v.  Merchants'  Bk.,  314. 
Mechanics'  Bankr.  Valley  Packing  Co., 

221,243. 
Mechanics'  Banking  Asso.  &c.  v.  White 

Lead  Co.,  95. 
Mechanics'  Bk.  of  Alexandria  v.  Bank  of 

Columbia,  134. 
Mechanics'  &c.  Bank  v.  Crow,  145. 
Mecorneyr.  Stanley,  157. 
Meggettv.  Baum,  432. 
Mehagan  v.  McManus,  389. 
Mehlberg  v.  Fischer,  502. 
Meikel  v.  State  Sav.  Bk  .  409. 
Meise  v.  Doscher,41. 
Meise  v.  Newman,  358. 
Meitze  V.  AVolfe,  219. 
Melick  V.  First  Nat.  Bk.,  4.33. 
Melledge  v.  Boston  Iron  Co.,  13. 
Mellerd  v.  Thorn,  434. 
Mellish  V.  Simeon,  173. 
Melville  v.  Glendennlng,457. 
Menaugh  v.  Chandler,  256. 
Mendenhall  v.  Baylies,  207. 
Menkens  v.  Ilerringhl,  SO. 
Mense  v.  Osbern,377. 
Merchants'  Bk.  v.  Birch,  361. 
Merchants'  Bk.  v.  Elderkin,  318. 


TABLE    OF   CASES    CITED. 


References 

Merchants'  Bk.  r.  National  Bk.,  488. 
Merchants'  Bank  v.  Splcer,  13,  218,  309, 

464,  466,  479,  480. 
Merchants'  Bk.  v.  State  Bk.,  116,459,  462, 

463,  465. 
Merchants'  Exch.  Bk.  v.  Luckow,  433. 
Merchants'  Exch.  Nat.  Bk.  v.  Sav.  Inst., 

274. 
Mercliants'  Nat.  Bank  t.  Citizens 

Gasligtit  €o.  (in  full),  115. 
Merchants'  Nat.  Bk.  v.  Eagle  Nat.  Bk., 

468. 
Merchants'  Nat.  Bk.  v.  Gregg,  212. 
Merchants'  Nat.  Bank  v.  Lovitt,  96. 
Merchants'  Nat.  Bk.  v.  McNler,  270. 
Merchants'  Nat.  Bank  v.  Spates,  198. 
Merchants'  Nat.  Bk.  v.  Tracy,  270. 
Merchants'  &c.  Nat.  Bk,  v.  Trustees  of 

Masonic  Hall,  274. 
Merchants'  &  Farmers'  Bank  v.  Wex- 

son,  154. 
Merlden  Steam  Mill  v.  Guy,  211. 
Merrick  v.  Boury,  407. 
Merrill  v.  Hurley,  26. 
Merrill  v.  Monticello,  103. 
Merrill  v.  Packer,  145. 
Merritt  v.  Duncan,  256. 
Messmore  r.  Meyer,  150. 
Messmore  v.  Morrison,  23,  314. 
Metcalf  V.  Richardson,  369. 
Metropolitan  Nat.  Bk.  v.  JoneB,  462. 
Meyer  r.  Beardsley,  410 
Meyer  r.  Croix,  180. 
Meyer  t'.  Hllcher,  311. 
Meyer  v.  Hlbscher,  311. 
Meyer  v.  Hunecke,  407. 
Meyer  v.  Lathrop,  504. 
Meyer  v.  Richards,  199,  202,  203. 
Michigan  Bank  v.  Eldred,  11,  92, 251. 
Mlddaugh  v.  Elliott,  407,  413. 
Middlesex  v.  Thomas,  502. 
Middleton  v.  Griffith,  211. 
Miles  V.  Hall,  365. 
Miles  V.  llelniger,  200. 
Milks  r.  Rich,  199,  429. 
Miller  f.  Clendenin,  224,  353. 
Miller  r.  Delamater,  81. 
Miller  r.  Flnley,271. 
Miller  V.  Hackley,  'Hi,  366,  389. 
Miller  v.  Irby's  Admr.,  517. 
Miller  V.  Lunsden,  504. 
Miller  v.  Nelhaus,  176. 
Miller  V.  Ottawa,  279. 
Miller  V.  Redwlne,  105. 
Miller  V.  Tharel,  201. 
Miller  r.  Thompson,  172. 
Miller  V.  Weeks,  20. 
Mills  V.  Bk.  of  U.  S.,  318,  370,  371. 
Mills  V.  Gleason,  102. 


are  to  Pages. 

Mills  V.  Porter,  262, 

Mims  V.  West,  272. 

Minchart  i:  Handlln,  366. 

Minell  v.  Read,  272. 

Miner  v  Bradley,  493. 

Mlnet  V.  Gibson,  49. 

Mining  Co.   v.  Anglo-California    Bank, 

116,131. 
Minor  v.  Mechanics'  Bank  of  Alexander, 

SG. 
Minot  T.  Rass  (in  fall),  475. 
Mlnot  r.  Rnss,  462. 
Minturn  v.  Fisher,  460,  469. 
Miser  V.  Trovlnger,  360, 383,  384. 
Mishlert'.  Reed,  271. 
Mitchell  V.  Baring,  340. 
Mitchell  V.  Barney,  312. 
Mitchell  V.  Burlington,  103. 
Mitchell  V.  Byrne,  38. 
Mitchell  V.  Catchings,  266. 
Mitchell  V.  St.  Mary,  27. 
Mitchinson  v.  Hewson,  80. 
Mix  V.  Nat.  Bank  of  Bloomlngton,  152, 154. 
Moakeley  v.  Rlggs,  426. 
Moeser  v.  Schneider,  176. 
Moffett  V.  Hampton,  98. 
Moge  r.  Herndon,408. 
Mobawli   Bank   v.  Brodeiick    (in 

full),  478. 
Mohawk  Bk.  v.  Broderick,  170,  383,  465, 

467. 
Moies  V.  Bird.  149,  427,  428. 
Moiesc  V.  Knapp,  13, 174. 
Monroe  I'.  Hoff,  503. 
Monson  v.  Drakely,  410,  436. 
Montague  r.  Perkins,  174. 
Monlelins  v.  €barles  (In  full),  184. 
Montclinsi".  Charles,  171. 
Montgomery  f.  Crossthwalte,  224. 
Slontgomerj'  v.  Kello^rg,  430. 
Montgomery  Co.  Bank  v.  Marsh,  367. 
Monument  Nat.  Bank  v.  Globe    Works, 

95,115,  117. 
Moody  f.  Findley,  217. 
Moody  V.  Threlkeld,  174. 
Moore  v.  Baird,  261. 
Moore  v.  Bank,  294. 
Moore  v.  Bowmaker,  457. 
Moore  v.  Cross,  225. 
Moore  v.  Ilcrshey,  78. 
Moore  v.  Hutchinson,  407. 
Moore  v.  McClure,  88. 
Moore  i:  Robinson,  256. 
Moore  v.  Ryder,  155,  272, 
Moore  v.  WlUey,  174. 
Moorehcad  v.  Gilmore,  92. 
Moran  i\  Abbey,  496. 
Morcland's  Assignee  r.  Citizens'  N.  B., 

363. 

xlv 


TABLE    OF    CASES    CITED. 


Morey  v.  Wakefield,  266. 

Morgan    \.    Bank     of    LiOnlsville 

(,in  fall),  394. 
Morgan  v.  Edwards,  29. 
Morgan  v.  Thompson,  435. 
Morley  v.  Culverwell,  262. 
Morris  v.  Faurat,  237. 
Morris  v.  Harvey,  502,  503. 
Morris  r.  Pollion,  220. 
Morris  v.  Preston,  37,  219. 
Morrison  v.  Bailey,  355,  459,  466. 
Morrison  v.  Currie,  200,  234. 
Morrison  r.  Gartli,  410. 
Morrison  v.  Lovell,  199,  211. 
Morrison  r.  McCortney,  465. 
Morrison  v.  Smith,  408,  502. 
Morrison  Lumber  Co.  v.  Lookout    Mt. 

Hotel  Co.,  224. 
Morrow  v.  Whitealdes,  80. 
Morse  v.  Chamberlain,  367. 
Moses  r.  Ela,  388. 
Moses  V.  Franklin  Bk.,  472. 
Moses  V.  Liawrence  County  Bank 

(in  full),  436. 
Moss  r.  Averill,  95. 
Moss  t\  Livingston,  98, 122. 
Mott  V.  Hicks,  88, 123,  126,  215. 
Mott  V.  Wright,  203. 
Mount  Morris  Bk.  v.  Lawson,  408. 
Mount  Pleasant  Bk.  v.  McLeran,  168.306, 

310. 
Moantstephen  v.  Brooks,  16. 
Moye  V.  Cogdell,  501. 
Moyer's  Appeal,  391. 
Moynahen  v.  Hanford,  225. 
Mudge  r.  Bullock,  81. 
Mulcare  v.  Welch,  217. 
Muldrow  V.  Caldwell,  219. 
Mulherrln  v.  Hannum,  304. 
MulU".  Brlcker,176. 
Mullen  V.  Morris,  343. 
Muller  V.  Cook,  35. 
MuUer  v.  Pondlr,  38,  291. 
Mullman  v.  D'Eguino,  184. 
Mumford  v.  Am.  L.  Ins.  Co.,  94. 
Mnmford  v.  Weaver  cin  full),  205. 
Muncy  School  Board  r.  Com.,  170. 
Mnnger  r.  Shannon,  27. 
Munn  V.  Burch,  495. 
Munn  V.  Commission  Co.,26L 
Munroe  v.  Bordier,  148. 
Murphy  v.  Carey,  152. 
Murray  v.  Beckwith,  257,  295. 
Murray  v.  East  India  Co.,  304. 
Murray  r.  Judah,  466,  479. 
Musselman  r.  Oakes,  18. 
MuHserr.  Johnson,  135. 
Mnssey  r.  Scott,  87. 
Musson  V.  Lake,  318,342,  357,  371. 

xlvi 


References  are  to  Pages. 

Mutual  Life  Ins.  Co.  v.  Hunt,  78. 

Muzzy  V.  Knieht,  67. 

Myers  v.  Elazzard,  272. 

Myers  r.  Nell,  408. 

Myers  v.  Standart,  180,  377,  411. 


:n' 


Nabb  V.  Koontz,  439. 

Naglee  v.  Lyman,  179. 

Nance  v.  Lary,  253,  287. 

Naples  V.  Brown,  274. 

Narragansett  Bank  v.  Atlantic  Silk  Co., 

116. 
:Nasb  V,  Brown  (in  full),  331. 
Nash  V.  Brown,  312. 
Nashv.  Mitchell,  85. 
National  Bank  v.  Bradley,  362,  393. 
National  Bank  v.  Green,  211,  260,  261. 
National  Bank  r.  Leonard,  21,  200. 
National  Bank  v.  Lewis,  3S9. 
National  Bank  v.  Matthews,  96. 
National  Bank  v.  Wells,  95. 
National  Bank  of  Auburn  v.  Lewis,  259. 
National  Bank  of  America  v.  Nat.  Bk. 

of  111.,  145. 
National  Bank  of  Battle  Creek  v.  Dean, 

267. 
National  Bank  of  Bedford  v.  Stever,  269. 
National  Bank  of  Commerce  v.  Atkin- 
son, 97. 
National  Bank  of  Commerce  v.  Law,  92. 
National  Bank  of  Commerce  v.  Nat.  M. 

B.  Assn.,  392. 
National  Bank  of  N.  A.  v.  Klrby,  268. 
National  Bank  of  N.  A.  v.  White,  150. 
National  Bank  of  Pittsburg  v.  Wheeler, 

214. 
National  Bank  of  St.  Joseph  v.  Dakln, 

252. 
National  Bank  of  Washington  v.  Texas, 

222. 
National  Exch.  Bk.  v.  Kimball,  390. 
National  Exch.  Bk.  v.  Silliman,  213. 
National  Exch.  Bk.  v.  White,  251. 
National  Gold  Bk.  v.  McDonald,  468. 
National  Hudson  River  Bk.  v.  Moffett, 

306,  318. 
National  Newark  Bkg.  Co.  v.    Second 

Nat.  Bk.,  171. 
National  Park  Bk.  v.  Ninth  Nat.  Bk.  182. 
National  Pemberton  Bank  v.  Lougee,  14> 

426 
National  Pemberton  Bk.  v.  Porter,  78, 96. 
National  Safe  &  Lock  Co.  v.  People.  469. 
National  Security  Bank?'.  McDonald,  66. 
National  Shoe  &  Leather  Bk.r.  Gooding, 

305. 


TABLE    OF    CASKS    CITKD. 


References 

National  Spraker  Bk.  v.  Treaclvvell  Co., 
96. 

National  State  Bk.  v.  Linderman,  463. 

National  State  Bk.  v.  Weil,  465. 

National  Union  Bk.  v.  Todd,  151. 

Nave  V.  Hadley,  89. 

Nave  V.  Richardson,  309,  310,  342. 

Nazro  v.  Fuller,  411. 

Nealv.  Smith,  43S. 

Nebraska  Natl.  Bk.  v.  Logan,  468. 

Ncedhams  v.  Page,  225. 

Neeley  v.  Morris, 340, 

Neil  V.  Case,  409. 

Nelson  v.  Boynton,  438. 

Nelson  v.  Cowing,  147. 

Nelson  v.  Dubois,  428. 

Nelsonf.  First  Nat.  Bk.,  179,  371,  463. 

Nelson  V.  Fotterall,  170,  336. 

Nelson  v.  Wellington,  299. 

Neptune  v.  Paxton,  98. 

Neuhoffr.  O'Reilly,  107. 

Nevins  v.  Bank  of  Lansingburgh,  365. 

New  V.  Walker,  145,  274. 

Newark  India  Rubber  Co.  v.  Bishop,  309. 

Newberry  v.  Trowbridge,  369,  392. 

Newbold  v.  Barnet,  225. 

Newbold  i\  Boraef,  387. 

Newell  V.  Gregg,  268. 

Newgass  v.  New  Orleans,  103. 

New  Haven  Co.  v.  Goodwin,  403. 

New  Haven  Co.  Bk.  v.  Mitchell,  372. 

Newman  v.  Kaufman,  459. 

Newman  v.  King,  410,  412. 

Newman  v.  Williams,  259. 

New  Orleans  Canal  &c.  Co.  v.  Montgom- 
ery, 223. 

New  Providence  v.  Halsey,  103. 

Newton  Wagon  Co.  v.  Diers,  428. 

New  York  &  Ala.  C.  Co.  v.  Selma  Sav. 
Bk.,  360. 

New  York  &c.  Co.  v.  Meyer,  384. 

New  York  Iron  Mine  v.  Citizens'  Rank, 
166. 

New  York  Nat.  Exch.  Bk.  v,  Crowell,  270. 

Nicely  V.  Commercial  Bank,  29. 

Nickerson  v.  Babcock,  61. 

Nlckerson  r.  Gilliam,  105. 

Nickerson  v.  Ruger,  271,  273. 

Nickerson  v.  Sheldon,  59. 

Nichols  V.  Allen,  428. 

Nichols  t'.  Batc.'iOS. 

Nichols  V.  Blackmore,  171, 186. 

Nichols  V.  Commercial  Bank,  179. 

Nichols  V.  Diamond,  173. 

Nichols  V.  Pearson,  259,  260. 

Nichols  r    Pool,  3-*l. 

Nichols  r.  Thomas,  78. 

Nichols  &  Sheppard  Co.  v.  Dedrlck,  154. 

NlchoUs  V.  Webb,  339. 


are  to  Pages. 

Nicholson  v.  Combs,  410. 

Niess  V.  Coats,  201. 

Nifflin  V.  Smith,  93. 

Nightingale  I'.  Chafie,  502. 

Nightingale  v.  Withington,  77. 

Nimocks  v.  Woody,  7, 178. 

Ni.xon  V.  Palmer,  85. 

Noble  V.  Walker,  259,  260,  261. 

Noel  v.  Gaines,  67. 

Noel  V.  Kinney  (in  full),  107. 

Norfolk  N.  Bk.  v.  Griffin,  150. 

Norris  v.  Badger,  308,  501. 

Norris  v.  Despard,  382. 

North  Atchison  Bank  v.  Ganetson,  175. 

Nortb   Atchison    Bank  v.  Gay    (in 

full),  440. 
North  Atchison  Bk.  v.  Gay,  433. 
North  Atchison  Bank  v.  Gray,  148. 
Northam  v,  Latouche,  79. 
North  River  Bank  v.  Aymer,  86. 
Northrup  v.  Sanborn,  460. 
Northumberland  Co.  Bk.  v.  Eyer,  429. 
Norton  v.  Coons,  436. 
Norton  v.  Norton,  38, 
Norton  V.  Pickering,  384. 
Norwich  Bank  v.  Hyde,  33. 
Noxon  V.  DeWolf,  223. 
Noxon  V.  Smith,  21. 
Noyes  v.  Gilman,  34. 
Nunes  V.  Russell,  263. 
Nunez  r.  Danteles,  26. 
Nunnemacker  v.  Johnson,  500,  601. 
Nutting  V.  Sloan,  84. 

o 

Gates  V.  National  Bank,  154,  269, 

Oatman  v.  Taylor,  104. 

Oberman  v.  Uoboken  City  Bk.,  468. 

O'Brien  v.  Grant  (in  full),  481. 

O'Brien  v.  Smith,  466. 

Ocean  Nat.  Bk.  v.  Faut,  318. 

Ocean  Nat.  Bk.  v.  Williams,  338.  339,  340, 

341. 
Odd  Fellows  v.  First  Nat.  Bank,  87. 
Oddier.  Nat.  City  Bk.,  468. 
Odell  r.  Gallup,  409. 
Offuttv.  Rucker,  465. 
Ogden  V.  Saunders,  214. 
Olendorff  v.  Swatz,  389. 
Olshausen  v.  Lewis,  171. 
Olson  V.  Peterson,  23. 
Omaha  Nat.  Bk.  v.  Walker,  429. 
O'Neal  r.  Rupp,  74. 
Onondaga  Co.  Sav.  Bk.  v.  I'nlted  States, 

214. 
Oppenhelmer  v.  Farmers'  &c.  P>ank,29, 

261. 
Ordeman  v.  Lawson,  428. 

xlvii 


TABLE    OF    CASES    CITED. 


References 

Orear  v.  McDonald,  383. 

Oridge  V.  Sherburne,  315. 

O'llourke  v.  Hanchett,  392. 

Orr  V.  Maginnis,  341. 

Ortr.  Fowler,  19,  50. 

Osborn  v.  Hawley,  30. 

Oeborn  r.  Klstler,  35,  99. 

Osborn  v.  Robbins,  255. 

Osborne  v.  Smith,  314. 

Osborne  v.  Thompson,  434. 

Osf  ood  V.  Artt,  201,  208,  291. 

Otis  V.  CuUom,  199. 

Otis  r.  Van  Storch,  434. 

Otisfield  V.  Mayberry,  501. 

Ottawa  V.  First  Nat.  Bk.,  103. 

Ottor.  Belden,305. 

Overman  v.  Bank,  488. 

Overman  v.  Hoboken  City  Bank,  172. 

Overton  v.  Mathews,  408,  410. 

Owen  V.  Van  Usster,  173. 

Owens  r.  Taguc,  433. 

Owings  V.  Baker,  225,  226. 

Oxford  Bank  v.  Haynes,  431. 

Oxford  Iron  Co.  v.  Spradley,95. 

Oxmond  v.  Varnum,  392. 


Pace  V.  Robertson.  435. 

Packard  v.  Herrington,  433. 

Packard  v.  Lyon,  312. 

Packard  v.  Richardson,  428. 

Packard  v.  Society,  117. 

Packer  r.  Wetherell,  219. 

Packwood  v.  Gridley,  272. 

Paddock  i\  Brown,  140. 

Page  V.  Bank  of  Alexandria,  438. 

Page  V.  Danaher,  409. 

Page  r.  Gilbert,  371. 

Page  V.  Lathrop,  308. 

Page  V.  Marrell,  11. 

Paine  v.  Central  Vermont  R.  R.,  439. 

Paine  r.  Johnson,  434. 

Palmer  v.  Field,  217. 

Palmer  r.  Grant,  14. 

Palmer  v.  Marshall,  248. 

Palmer  v.  Nassau  Bk.,  273. 

Palmer  v.  Rice,  179. 

Palmer  v.  Sargent,  254. 

Palmer  v.  Ward,  28. 

Palmer  v.  Whitney,  273. 

Paramore  v.  Llndsley,  409,413. 

Pardier.  Fish,  31. 

Paris  V.  Moe,  499. 

Parish  v.  Stone,  35. 

Park  Bank  v.  Watson,  154. 

Parker  v.  Carson,  18. 

Parker  v.  Gordon,  170,  348,  350. 

Parker  v.  Kellogg,  312. 

xlviii 


are  to  Pages. 

Parker  v.  Riddle,  212. 

Parkharst  v.  Vail,  225,  427,  430,  439. 

Parks  V.  Duke,  36. 

Parmelee  v.  Austin,  42. 

Parnell  v.  Phillips,  93. 

Parr  v.  Jewell,  264. 

Parrott  v.  Colby,  503. 

Parshley  v.  Heath,  389. 

Parsy  v.  Spikes,  428. 

Patch  V.  Washburn,  226. 

Patch  V.  Wheatland,  93. 

Paterson  Bank  v.  Butler,  368. 

Patience  r.  Townley,  382,  396. 

Paton  V.  Lent,  368. 

Patten  v.  Gleason,  271. 

Patterson  v.  Carroll,  223. 

Patterson  v.  Case,  201. 

Patton  V.  Winter,  180. 

Paulette  v.  Brown,  154,  270. 

Pauly  V.  Murray,  149. 

Paxson  V.  Nields,  145. 

Paysantj;.  Ware,  11. 

Peabody  v.  McAvoy,  273. 

Peabody  Ins.  Co.  v.  Wilson,  305,  311,  344, 

345,  363. 
Peale  V.  Addicks,  264. 
Pearson  v.  Garrett,  24. 
Pearson  v.  Bk.  of  Metropolis,  318. 
Pease  v.  Pease,  88,  98, 136. 
Pease  v.  AVarren,  307,  499. 
Peaslee  v.  Robins,  78,  103. 
Peckham  v.  Ilendren,  255. 
Pendleton  v.  Knickerbocker  L.  Ins.  Co., 

314. 
f»eninsular  Sav.  Bk.  v.  Hosie,  224,  435. 
Penn  v.  Bornman,  512. 
Pennington  v.  Baehr,  14. 
Pentz  V.  Stanton,  122,  132. 
People  V.  Johnson,  104. 
People  V.  McDermott,  34. 
People  V.  N.  R.  Bk.,  365. 
People  V.  St.  Nicholas  Bk.,  464. 
People  V.  Weber,  41. 
People's  Bank  v.  Bogart,  199. 
People's  Bank  v.  Brooke,  318,  342. 
People's    Bank    v.    Jefferson    Co. 

Sav.  Bank  (In  full),  239. 
People's  Bank  v.  Jefferson  Co.  Sav.  Bk., 

221. 
People's  N.  Bk.  v.  Dibrell,  371. 
Peoria  &c.  R.  R.  Co.  v.  Neill,  182. 
Perkins  v.  Catlin,  428. 
Perkins  v.  Franklin  Bk.,  315. 
Perkins  v.  White,  268,  384. 
Perry  v.  BIgelow,  65. 
Perry  v.  Crammond,  37. 
Perry  I'.  Friend,  225. 
Perry  v.  Perry,  500. 
Petefish  V.  Watklns,  433. 


TABLE    OF    CASES    CITED. 


References 

Peter  v.  Beverly,  602. 

Peters  v.  Hobbs,  36S,  382. 

Pcto  V.  Reynolds,  173. 

Petri  V.  Fond  da  Lac,  N.  B  ,  261. 

Petty  f.  Douglass,  43-1. 

Petty  r.  Fleishcl,  54. 

Pettyjohn  v.  Liebscher,  145. 

Phelan  v.  Moss,  258. 

Phelpa  V.  Borland,  175. 

Phelps  I'.  Church,  219. 

Phelps  r.  Pond,  205. 

Phelps  V.  Stocking,  364. 

Phelps  V.  Visher,  225. 

Pheli>s,  Dodge  &  Palmer  Co.  v.  Hopkln- 

son,  146. 
Phllbrlck  V.  Dallett,  190. 
Philier  v.  Patterson,  150. 
Philips  V.  Frost,  177. 
Philips  V.  Preston,  436. 
Phillips  V.  Alderson,  365. 
Phillips  V.  Bullard,  504. 
Phillips  V.  Dippe,3S9. 
Phillips  V.  Dugan,  500. 
Phillips  V.  Hatch,  82. 
Phillips  V.  McCrordy,339. 
Phillips  V.  Thurn,50. 
Phllpotf.  Briant,  457. 
Phipi)s  I".  Ilardmg,  357. 
Phoenix  Bank  v.  Hussey,  5. 
Phoenix  Ins.  Co.  v.  Allen,  167, 171. 
Phoenix  Ins.  Co.  v  Church,  153,  503. 
Pickaway  Co.  Bank  r.  Prather,  96. 
Pickering  v.  Cording,  20. 
Picklar  r.  Harlan,  359. 
Pier  V.  Ueinrichshotfen,  387. 
Pierce  v.  Schoden,  369. 
Piker.  Baldwin,  105. 
Pillow  r.  Hardeman,  361. 
Piner.  Smith,  268. 
Piner  v.  Clary,  338. 
Pinkerton  v.  Bailey,  223. 
Plnkertonr.  Marshall,  175. 
Pinney  v.  Administrators,  etc.,  141. 
Pircz  V.  Bank  of  Key  West,  498. 
Pitman  r.  Breckenridge,  358. 
Planters'  Bank  v.  Evans,  20. 
Planters'  Bank  v.  Kesee,  459. 
Planters'  Bank  v.  Sharp,  96. 
Planters' &c.  Ins.  Co.  v.  Funstall,  201. 
Plato  V.  Reynolds,  106. 
Piatt  V.  Beebe,  151,  1.52. 
Plummer  r.  Lyman,  176. 
Plyler  v.  Elliott,  444. 
Poett  V.  Stearns,  5('0. 
Poindexterr.  Greenhow,  100. 
Polk  r.  Spinks,  382. 
Pollard  V.  Bowen,  338,  465. 
Pollard  V.  Huff,  426. 
Pollack  r.  Brush  Electric  A8SOCiatlon,4u9. 


are  to  Pages. 

Pollock  r.  Helm,  178. 

Polo  Mfg.  Co.  V.  Parr,  67. 

Pomeroy  v.  Tanner,  166,  183. 

Pond  V.  Waterloo  Agr.  Works,  257. 

Poock  V.  Lafayette  Bldg.  Assn.,  96. 

Pool  V.  Anderson,  428. 

Poole  V.  Williams,  104. 

Poorman  v.  Mills,  265. 

Pope  V.  Bk.  of  Albion,  463. 

Popley  V.  Ashley,  198. 

Porter  v.  Cushman,  220,  499. 

Porter  v.  Kimball,  390. 

Porter  v.  Porter,  24. 

Porterfield  v.  Butler,  80. 

Post  i\  Abbeville  &  W  Ry.  Co.,  271. 

Post  V.  Kinzua  Hemlock  R.  R.  Co.,  24. 

Potter  V.  Merchants'  Bk.,97. 

Potter  f.  Tyler,  219. 

Potts  V.  Mayer,  503. 

Powder  Co.  v.  Sinshelner,  141. 

Powell  V.  Waters,  37. 

Powers  V.  French,  148. 

Powers  i'.  Nelson,  222. 

Pratt  V.  Foote,  468. 

Pratt  r.  Ilcdden,  149. 

Pray  v.  Rhodes,  150. 

Preble  r.  Hunt,  145. 

Presbrey  v.  Williams,  267. 

Prefcby  v.  Thomas,  305,  339. 

Prescottv.  Flinn,  86. 

Prescott  V.  Hull,  196. 

Prescott  Bank  r.Caverly,  167, 170,  171. 

Preston  v.  Spaulding,  493,  494. 

Prettymanv.  Short,  23:1,  235. 

Prewittr.  Chapman,  17. 

Price  V.  Teall,29. 

Price  V.  Torrington,  402. 

Prideaux  v.  Collier,  392. 

Priest  V.  Watson,  426. 

Prince  v.  Crawford,  91. 

Pritchard  v.  Smith,  358. 

Proctor  V.  Whitcomb,  304. 

Protalonga  r.  Lares,  182. 

Provident  Sav.  L.  Ass.  Co.  v.  Edmonds, 

225. 
Parcell  v.  Allemong,  38i,  465, 472. 
Purviance  v.  Jones,  37. 
Putnam  v.  Crymes,  21. 
Putnam  v.  Schuyler,  433. 
Putnam  v.  Sullivan,  254. 


Q 


Quick  V.  Milligan,  63. 
Quinby  v.  Stoddard,  263. 
Quin  V.  Hanford,  176. 
Quln  r.  Sterne,  218. 
Quln  V.  Bard,  272. 
Quinnr.  Dresback,  499. 


xlix 


TABLE    OF    CASES    CITED. 


Quinn  v.  Hard,  274. 
Qaintance  v.  Goodrow,  389. 

E 

Raborg  v.  Peyton,  133. 
Rahm  v.  King- Bridge  Mfg.  Co.,  223. 
Railroad  Co.  r.  Schalte,  2U,  261. 
Railway  &c.  Pub.  Co.    v.  Lincoln   Nat. 

Bk.,270. 
Raiubolti'.  Eddy,  413. 
Ramsdell  v.  Morgan,  146. 
Rand  V.  Cutler,  432. 
Randr.  Dovey,  211. 
Randolph  X.  Bk.  v.  Hornblower,  462. 
Raney  v.  Winter,  87. 
Ranger  v.  Cary,  202,  266. 
Ranger  v.  Sergeant,  427. 
Ransom  v.  Sherwood,  212. 
Rash  V.  Farley,  147. 
Ratcliffe  V.  Planters'  Bank,  169,  3S6. 
Rathbun  I".  Citizens  Steamboat  Co.,50,t. 
Rawson  r.  Davidson,  35,  99. 
Ray  V.  Smith,  214,  381,  384,  3SS. 
Ray  V.  Tubbs,  77. 
Raymond  v.  McNeal,  426. 
Raymonds.  Middleton,  21,  212. 
Raymond  v.  Selllck,  205. 
Raynor  v.  Koagland,  291. 
Rea  V.  McDonald,  145,  150. 
Read  v.  Bank  of  Ky.,  340,  341. 
Read  v.  Evans,  428. 
Read  V.  Marsh,  179. 
Reamer  V.  Bell,  219. 
Redllck  V.  Doll,  174,  251,  413. 
Redman  v.  Adams,  28. 
Reed  v.  Bott,  353. 
Reed  v.  Roark,  13,  408. 
Reedr.  Stoddard,  434. 
Reed  v.  Wilson,  31fi,  317. 
Reedy  V.  Brunner,  256. 
Rees  V.  Warwick,  177. 
Reeve  v.  Pack,  180,  304. 
Reeves  v.  Pierson,  411. 
Reeves  v.  Stipp,  57. 
Reid  V.  Furnival,  213. 
Reld  V.  Morrison,  383. 
Reid  t'.  Reid,  468. 
Reilly  v.  Dodge,  451. 
Reinke  v.  Wilson,  393. 
Reinkei'.  Wright,  392. 
Renick  v.  Robbins,  358. 
Renshaw  v.  Triplett,  359. 
Requa  v.  Collins,  368,  386. 
Rexr.  Ballard,  406. 
Reynolds  v.  Appleman,  344, 371. 
Reynolds  v.  Douglass,  431. 
Reynolds  v.  Manning,  403. 
Reynolds  v.  Robinson,  138. 

1 


References  are  to  Pages. 

Rhettt'.  Pole,  360,  384. 

Rhode  V.  Proctor,  360. 

Rhoades  v.  Gent,  321. 

Rhodes  V.  Jenkins,  214. 

Rhodes  r.  Lindley,  55. 

Rice  V.  Stearns,  233. 

Rich  V.  Starbuck,  17,  40,  147. 

Richards  v.  Darst,  37. 

Richards  v.  Stephenson,  200. 

Richardson  v.  Fenner,  171. 

Richardson  v.  Lincoln,  38,  233. 

Richardson  v.  Pitts,  135. 

Richardson  v.  Richardson,  145. 

Richford  v.  Ridge,  480. 

Ricketts  t"  Bennetts,  91. 

Rittenhousei'.  Ammerman,  106. 

Riddle  V.  Mandcville,  438. 

Rldgeway  v.  Raymond,  93. 

Rieman  v.  Fisher,  234. 

Rlgby  V.  Norwood,  439. 

Riggan  v.  Green,  78. 

RIggiu  v.  Collier,  5. 

Riggs  V.  Trees  (in  full),  63. 

R.ker  v.  Sprague  Mfg.  Co.,  389, 

Riley  v.  Dickens,  33. 

Rindge  v.  Kimball,  405. 

Rindskopf  v.  Maloney,  343. 

Ring  V.  Jamison,  77. 

Ripley  V.  First  Xat.  Bk.  of  Spring* 

fleia  (in  full),  416. 
Risley  v.  Gray,  263. 
Ritchie  r.  Moore,  220. 
Rivers  v.  Thomas,  225. 
Roach  r.  Hill,  400. 
Roach  V.  Turner,  261. 
Roach  V.  Woodall,  412. 
Roark  r.  Turner,  260. 
Robarts  r.  Tucker,  48. 
Roberts  v.  Adams,  282. 
Roberts  V.  Austin,  7. 
Roberts  v.  Bethel,  174. 
Roberts  v.  Corbin,  472. 
Roberts  r.  Fisher,  198. 
Roberts  V.  Hall  (in  full),  285. 
Roberts  v.  Hall,  262. 
Roberts  v.  Lane,  264. 
Roberts  v.  Morrison,  86. 
Roberts  v.  Richardson,  434. 
Roberts  v.  Thompson,  520. 
Roberts  v.  Wald,  316. 
Roberston  "   Allen,  214. 
Robertson  i;.  Banks,  104. 
Robertson  r.  Bruner,  80. 
Robertson  r.  Deathrage,  436. 
Robertson  v.  Kensington,  220. 
Robertson  v.  Rowell,  148. 
Robbins  v.  Pinckard,  377. 
Robinson  v.  Abell,  225. 
Robinson  v.  Ames,  170, 180, 186.  383,  480. 


TABLE    OF    CASES    CITED. 


References  are  to  Pages. 


Robinson  v.  Bank,  236. 

lioblnson  v.  Bartlctt,  225. 

Uobinson  v.  Chemical  Nat.  Bank,  8i. 

Robinson  v.  Gould,  157. 

Robinson  v.  Lair,  202,  429. 

Robinson  v.  Reynolds,  101. 

Robinson  v.  Smith,  264 

Robinson  v.  Yarrow,  IS:?. 

Robson  V.  Bennet,  4S1. 

Roby  t'.  Phclon,  20. 

Rochncr  V.Knickerbocker  L. Ins. Co.,31t). 

Rock  Co.  Bk.  V.  Ilallister  221. 

Rodabaugh  v.  ritkln,  4:;o. 

Rodney  v.  Wilson,  SSO. 

Rodocanachl  v.  Buttcrick,  14. 

Rogers  v.  Burlington,  103. 

Rogers  v.  Blackwell,  78. 

Rogers  v.  Colt,  218. 

Rogers  v.  Rogers,  104. 

Rog^ers  v.  Scliool  Trustees  (in  full), 

433. 
Rogers  r.  Walsh,  199. 
Rogers  v.  Ware,  50. 
Roger  Williams   Nat.  Bank  v.   Groton 

Mfg.  Co.,  105. 
Roll  V.  Raguet,  73. 
Rose  V.  Hurley,  256. 
Rosemont  v.  Graham,  155. 
Rosenthal  v.  Ehrlicher,  467. 
Rosher  v.  Kleran,  370. 
Rosst'.  Bydell,383. 
Ross  V.  Doland,  254. 
Ross  V.  Espy,  73. 
Ross  V.  Hurd,  392. 
Ross  V.  Terry,  199,  200. 
Ross  V.  Webster,  147. 
Rossi  V.  Schawacker,  224. 
Rosson  V.  Carroll,  359,  363. 
Rothr.  Colv!n,92. 
Rounds  V.  Smith,  477,  511. 
Rousch  V.  Duff,  178. 
Rowe  V.  Collier,  502. 
Rowe  V.  Smith,  109. 
Rowe  V.  Tippen,  377. 
Rowland  r.  Fowler,  269. 
Rowland  v.  Levy,  322. 
Rowse  V.  Johnson,  434. 
Roxborough  j-.  Messick,  155. 
Rudd  V.  Matthews,  414. 
Ruddell  r.  Dillman,  254. 
Rudolph  r.  lircwcr,  149. 
Rufff.  Webb,  22,  23. 
Rugglcs  i:  Swanwlck,  38. 
Russell  V.  Ilall,  35. 
Russell  V.  Phillips,  160. 
Rutland  r.  Brldter,  148. 
Ryan  v.  Doyle,  41)8. 
Ryan  v.  First  Nat.  Bk.,  412. 
Ryhlner  v.  Felckert,  IS,  85. 


s 


Sackelt  v.  Kellar,  256. 

Sackett  V.  Palmer,  27. 

Saco  N.  B.  t'.  Sanborn,  367,  368. 

Sage  V.  Wilson,  428. 

Salandert'.  Lockwood,250. 

Salinas  v.  Wright,  27. 

Salisbury  v.  Bartleson,  385. 

Salisbury  v.  First  Nat.  Bk.,  225. 

Salisbury  r.  Renick,  170. 

Solomon  v.  Pfelster,  etc.,  Co.,  371. 

Salter  v.  Burt,  316,  460. 

Salt  Springs  Nat.  Bank  v.  Burton,  317. 

Salt  Springs   STat.  Bank   v.  Sloan 

(In  full),  444. 
Salt  Springs  Nat.  Bank  v.  Sloan,  434. 
Sample  v.  Cochran,  433. 
Sampson  v.  Fox  (in  full),  513. 
Sampson  r.  Fox,  500. 
Samslng  V.  Conley,  212. 
Samuel  v.  Ilowarth,  457. 
Sanders  r.  Anderson,  13. 
Sanders  v.  Bagwell,  444. 
Sanders  v.  Blaln,  107. 
Sanderson  v.  Relnstadler,  365,  367. 
Sanford  r.  .Norton,  2.J6. 
Saratoga  Bank  v.  King,  146. 
Sargent  v.  Applcton,  433. 
Sasscerz'.  Farmers'  Bk.,  ,^44. 
Sater  v.  Hunt,  497. 
Saunderson  v.  Jackson,  14. 
SaTage  v.  King,  SO,  291,  292. 
Savage  v.  M'alsh,  96. 
Savannah  Nat.  Bank  v.  Raskins,  178. 
Savannah  &c.  Ry.  Co.  v.  Schieffclin,  180, 

181. 
Savings  Bk.  v.  Bates,  268. 
Sawyer  v.  Allen,  265. 
Sawyer  v.  Bradford,  434. 
Sawyer  v.  Child,  24. 
Sawyer  v.  Fernald,  149. 
Sayles  v.  Sims,  426,  431,  432. 
Say  rev.  Frlck,3G0. 
Sayre  v.  Wheeler,  39. 
Scanlon  i:  Cobb,  78. 
Scanlon  v.  Keith,  126. 
Scarborough  r.  Harris,  .383. 
Schcpp  V.  Carpenter, 202,  272. 
Schlmmelpcnnlch    v.    Bayard,   165,   181, 

474. 
Schlesingcr  v.  Arline,  60. 
Schmidt  V.  Archer,  426. 
Schmidt  v.  Schmaeltcr,  14. 
Schmilllcr  v.  Simon  (In  full),  137. 
Schmlltler  r.  Simon,  106. 
Schinitz  V.  Hawkeye  Gold  Mining   Co., 

23. 
Schneider  v.  Norrls,  14. 

li 


TABLE    OF    CASES    CITED. 


References 

Schoen  v.  Houghton,  248,  261. 

Schofield  V.  Bayard,  181,  182,  386. 

Schoharie  Co.  Nat.  Bk.  v.  Bevard,  180. 

Scholefield  v.  Eichelberger,  381 , 

Scholfleld  V.  Londesborough,  413. 

School  Dlst.  V.  Sipley,  85. 

Schoonmaker  v.  Roosa,  35. 

Schorr  v.  Woodlief,  344. 

Schroeder  V.  Nielson,  145. 

Schuchardt  v.  Ilall,  383. 

Schultz  i:  Astley,  406. 

Schultz  V.  Howard,  225. 

Schuylkill  Co.  v.  Capley,  264. 

Schwartz  v.  Oppold,  410. 

Scott  V.  Conway,  110. 

Scott  V.  First  Nat.  Bk.,  263,  264,  360. 

Scott  I'.  Gllkey,502. 

Scott  V.  Harris,  434. 

Scott  V.  Llddell,  213. 

Scott  V.  Lifford,  359. 

Scott  t'.  Meeker,  393. 

Scott  V.  Scott,  270. 

Scott  r.  Taul,432. 

Scott  &  Thatcher  v.  Colmesnil,  93. 

Scoville  V.  Landon,273. 

Scudder  v.  Union  Nat.  Bank,  4, 176,  179. 

Scull  V.  Roaue,27. 

Sea  V.  Glover,  26. 

Seabury  v.  Hungerford,  390. 

Seacord  v.  Meiller,  388. 

Searles  v.  Seipp,  21. 

Sears  v.  Lantz,  219. 

Seaton  v.  Scovill,  60. 

Seaver  v.  Lincoln,  306 

Seaver  v.  Phelps,  78. 

Sebree    Deposit   Bk.    v.  Moreland,  359, 

392. 
Second  Nat.  Bank  v.  AverlU,  460. 
Second  Nat.  Bank  v.  Basuier,  29. 
Second  Nat.  Hank  v.  Hewitt,  248. 
Second  Nat.  Bank  v.  Howe,  150. 
Second  Nat.  Bank  v.  McGuire,  388. 
Second  Nat.    Bank  v.  Morgan,  248,  257, 

270. 
Second  Nat.  Bank  t;.  West.  Nat.  Bk.,463. 
Second  Nat.  Bank  i'.  Wetzel,  503. 
Second  Nat.  Bank  v.  Wheeler,  27. 
Second  Nat.  Bank  v.  Williams,  205. 
Security  Bk.  v.  Continental  Bk.,  462. 
Security  Bank  v.  Lucas,  211. 
Sedgwick  v.  Lewis,  91. 
Seibcl  V.  Vaughan,  413. 
Seldner  v.  Mt.  Jackbon  Nat.  Bk.,  388,  391. 
Seldonridge  v.  Connable,  11. 
Seligman  v.  Grady,  360. 
Seligman  v.  Rogers,  348. 
Selover  v.  Snively,  215. 
Semple  v.  Turner,  225. 
Seneca  Co.  Bk.  v.  Neass,  342,  344. 

lii 


are  to  Pages. 

Sentance  v.  Poole,  78. 
Searle  v.  Waterworth,  106. 
Seventh  Nat.  Bank  v.  Coot,  461,  462. 
Sewing  Machine  Oo.  v.  Moreno,  60,  61. 
Seybel  v.  Nat.  Currency  lik.,  257. 
Seyfert  v.  Edieon,  148, 150,  264. 
Seymour   v.  Continental  Life  Ins.  Co., 

267. 
Seymour  v.  Cowing,  138. 
Seymour   v.    Malcolm  &c.  Lumber  Co., 

273. 
Seymour  v.  Mickey,  226. 
Seymour  v.  Van  Slyck,  212. 
Shackleford  v.  Hooker,  17,  25, 179. 
Shaffer  v.  Maddox,  465. 
Shain  V.  Sullivan,  218. 
Sharts  v.  Await,  197. 
Shaver  v.  W.  U.  Tel.  Co.,  24, 177, 179. 
Shaw  V.  Camp,  26,  38. 
Shawi'.  Knox,  216,  217. 
Shaw  r.  Cutwater,  145. 
Shaw  V.  Reed,  305,  393. 
Shawi'.  Republic  L.  Ins.  Co.,  503. 
Shawr.  Spencer,  103,  270. 
Shawt'.  Stone,  100. 

Shawmut  Nat.  Bk.  v.  Manson,  152,  268. 
Shaylor  v.  Mix,  368. 
Shed  V.  Brett,  309,  313,  348,  358. 
Sheehan  v.  Jaft,  434. 
Sheehy  y.  Mandeville,  502. 
Shelborne  Falls  N.  B.  v.  Townsley,  362, 

363,  306,  368. 
Shelby  v.  Judd,  219,  305,  359. 
Shelden  V.  Parker,  202. 
Sheldon  v.  Butler,  429. 
Shepardw.  Hall,  363. 
Shepard  r.  Hawley,  360. 
Shephard  v.  Graves,  11. 
Shepherd  v.  Turner,  207. 
Sherwin  v.  Bingham,  178. 
Sherwood  v.  Snow,  91,  92. 
Shitf  V.  Shiff,  104. 
Shipley  i".  Carroll,  38. 
Shipman  v.  Bank  of  the  State  of  N.  Y.,  19. 
Shipman  v.  Cook,  357. 
Shipsey  r.  Bowery  Nat.  Bk.,  468. 
Shirts  V.  Overjohn,  254. 
Shisler  v.  Van  Dyke,  414. 
Shoe  Leather  Nat.  Bk.  v.  Dix,  98. 
Shoemaker  v.  Mechanics'  Bk.,364. 
Shoenberger's    Ex'rs  v.    Savings  Inst., 

379. 
Shreeves  v.  Allen,  273,  295. 
Shriner  v.  Keller,  384,  503. 
Shryvcri'    Hawkes,252. 
Shuetze  v.  Bailey,  134. 
Shugart  v.  Pattee,  60,  61. 
Shumway  V.  Reld,  504. 
Shute  V.  Robbins,  171, 186, 


TABLE    OF    CASES    CITED. 


References 

Shuttlesworth  v.  Noyes,  80. 

Shutts  V.  Fingar,  267. 

Sibley  V.  Am.  Exch.  Nat.  Bank,  359 

Stbley  V.  Phelps,  21. 

Sice  V.  Cunningham,  266. 

Sickles  V.  Mather,  403. 

Sidle  V.  Anderson,  35,  99. 

Sieger  V.  Second  Nat.  Bk.,391. 

Slgerson  v.  Matthews,  392. 

Silver  V.  Jordan,  89. 

Simmons  v.  Camp,  226. 

Simmons  v.  Cincinnati  Sav.  Soc,  20.') 
472. 

Simmons  Hardware  Co.  v.  Bk.  of  Green- 
wood, 472. 

Simon  tJ.  Merritt,264. 

Simons  V.  Morris,  264. 

Simpson  V.  Hall,  201,  263,  264. 

Simpson  V.  Pac.  Ins.  Co.,  466. 

Simpson  V.  Stockhouse,  409. 

Simpson  V.  Turney,  377. 

Simpson  V.  Vose,  284. 

Sims  V.  Hundley,  344. 

Sims  V.  U.  S.  Trust  Co.,  499 

Sinclair  v.  Johnson,  21. 

Sinker  w.  Fletcher,  211. 

Sioux  Nat.  Bank  v.  Cudahy  Packing  Co. 
100. 

Slzer  V.  Heacock,  434. 

Skelton  v.  Dustln,  317,  342,  349. 

Skidmore  i;.  Little,  36. 

Sklllman  v.  Titus,  465,  470. 

Skinner  v.  Church,  220. 

Skinner  v.  Uaynor,  270. 

Slack  V.  Kirk,  216,  217,  512 

Slade  V.  Mutrle,  497. 

Slagle  V.  Rust,  217. 

Slawson  v.  Loorlng,  132. 

Sloan  T.  Liatlmer  (In  full),  442. 

Sloan  V.  Latimer,  434,  435. 

Sloan  V.  Union  Banking  Co.,  145,  274. 

Slocum  V.  DeLizardi,  360. 

Slocum  V.  Hooker,  77. 

Small  V.  Clarke,  248, 390. 

Small  V.  Franklin  Min.  Co.,  504. 

Smalley  v.  Hale,  353. 

Smalley  v.  Wright,  361. 

Smedes  v.  Utlca  Bk.,  358. 

Smiley  V.  Melr,  60,  61. 

Smith  V.  Alexander,  98, 134. 

Smith  V.  Ayer,  269. 

Smith  V.  Bettger,  502. 

Smith  V.  Burrus,  354. 

Smith  V.  Caro.  359. 

Smith  V.  Case,  39. 

Smith  V.  Clark  County,  99. 

Smith  V.  County  of  Sac,  274. 

Smitli  T.  Cromer  (In  full),  323. 

Smith  V.  Cromer,  306. 


are  to  Pages. 

Smith  V.  Curlee,  338. 

Smith!'.  Dibrell,105. 

Smith  V.  Ferry,  223. 

Smith  V.  Finch,  429. 

Smith  r.  Glllen,  151. 

Smith  V.  Harper,  603. 

Smith  V.  Hogeland,  156. 

Smith  V.  Huckabee,  517. 

Smith  V.  Jones,  467. 

Smith  V.  Lltfe,  310. 

Smith  V.  Livingston,  257. 

Smith  V.  Lawnsdale,  388. 

Smith  V.  Marsack,  78,  183. 

Smith  V.  McClure,  21. 

Smith  V.  McNalr,  415. 

Smith  V.  Miller,  167,  357, 466,  504,  606. 

Smith  V.  Milton,  173. 

Smith  V.  Muncle  Nat.  Bank,  29, 166. 

Smith  r.Nevlin,  223. 

Smith  V    Phllbrlck,311. 

Smith  V.  Polllon,  362,  385. 

Smith  V.  Rawson,  197, 212. 

Smith  V.  Rockwell,  393. 

Smith  V.  Sawyer,  498. 

Smith  V.  Sheldon,  435. 

Smith  V.  Sloan,  91. 

Smith  V.  Smith,  412,  460. 

Smith  V.  Wachob,  155. 

Smith  V.  Weld,  410. 

Smith  v.  Weston,  151. 

Smith  V.  Whiting,  370. 

Smith  V.  Whitney,  107. 

Smith  V.  Williamson,  79. 

Smith  V.  Wyckoff,  37. 

Smook  V.  Ripley,  59. 

Snedden  v.  Harmes,  472. 

Snider  V.  Express  Co.,  136. 

Snlvely  v.  Johnston,  427. 

Snow  V.  Perkins,  370. 

Snydam  v.  Weatfall,  15. 

Snyder  v.  Jones,  35. 

Snyder  v.  Oatman,  212. 

Snyder  v.  Reno,  199. 

Snyder  v.  Van  Dorn,  40,  252. 

Snyder  v.  Wright,  244. 

Soares  v.  Glyn,  220. 

Soffe  V.  Gallagher,  503. 

Solarte  v.  Palmer,  371. 

Sondhelra  v.  Gilbert,  146,  164. 

South  Boston  Iron  Co.  v.  Brown,  148. 

Southerland  v.  Freemont,  436. 

Sonthwark  Bk.  v.  Gross,  411. 

Spalding  V.  Gates,  199. 

Sparks  V.  Despatcli  Transfer  Co. 

(in  full),  127. 
Spauldlng  v.  Andrews,  174,  179. 
Spauldliigv.  Evans,  18. 
Spauldlng  v.  Krutz,  367. 
Spaulding  v.  Putnam,  224. 

Uii 


TABLE    OF    CASES    CITED. 


References 

Spencer  v.  Allerton,  224. 

Spencer  v.  Carstarphen,  211. 

Spencer  v.  Halpern,  216. 

Spencer  v.  Harvey,  389. 

Sperry  v.  Harr,  29,  60. 

Sperry  v.  Spaulding,274. 

Speurs  V.  Ledergerber,  501. 

Sprague  v.  Fletcher,  390. 

Sprague  v.  Hosmer,  176. 

Spray  v.  Bnrk  (In  full),  162. 

Spriggr.  Bank  of  Mount  Pleasant,  15. 

Springer  v.  Puttkamer,  198. 

Springfield  Marine  Bk.  v.  Mitchell,  472. 

Stackpole  v.  Arnold,  132. 

Stacy  V.  Baker,  1 13. 

Stacy  V.  Bank,  245. 

Stafford  V.  Fargo,  263. 

Stafford  v.  Yates,  369. 

Stahl  V.  Berger,  408. 

Stalnback  v.  Bank  of  Va.,  168,362. 

Stainer  v.  Tyson,  86. 

Standage  v.  Creighton,  388. 

Stanley  v.  McElrath,  389,  499. 

Stanton  v.  Blossom,  358,  376,  383. 

Staples  V.  Franklin  Bk.,  316. 

Stapleton  v.  Louisville  Banking  Co.,  29. 

Starln  v.  Genoa,  103. 

Stark  V.  Alford,  498. 

Stark  w.  01sen,26,  29. 

Star  Wagon  Co.  v.  Sweezey,  388,  427. 

State  V.  Baker,  442. 

State  V.  Cobb,  412. 

State  V.  Givens,  406. 

State  V.  Hewitt,  442. 

State  V.  Huff,  104. 

State  V.  Libeity,  104. 

State  V.  McCormlck,  338,  343. 

State  V.  Modrel,  442. 

State  Bk.  v.  Napier,  318. 

State  V.  Potter,  441. 

State  V.  Shripe,  323. 

State  V.  Taylor,  30. 

State  Bk.  V.  Bartle,  392. 

State  Bank  v.  Kain,  86,  97. 

State  Bank  v.  McCoy,  79,  258. 

State  Bank  v.  Wllkle,  177,  270. 

State  ex  rel.  Block  v.  Cobb,  100. 

State  ex  rel.  Worklngmen's  Bkg.  Co.  v. 

Edmunds,  344. 
State  of  Wisconsin  v.  Torinus,  84. 
State  Sav.  Bk.  v.  Baker,  215. 
State  Sav.  Bk.  v.  Shaffer,  407. 
State  Trust  Co.  v.  Owen  Paper  Co.,  225 
Stayner  v.  Jolce,  410. 
Staynor  v.  Knowles,  305. 
Steckel  v.  Steckel,  436. 
Steele  r.  Russell,  356. 
Steel  Co.  V.  Brick  Co.,  299. 
Steers  v.  Holmes,  149. 

hv 


are  to  Pages. 

stein  V.  Passmore,  224. 
Steman  v.  Harrison,  178. 
Stephens  v.  Graham,  410,  416. 
Stephens  v.  Monongahela  Nat.  Bk.,  150, 

432. 
Stephens  v.  Olson,  262. 
Stephenson  v.  Dickson,  362,  371. 
Sterling  v.  Marietta  Co.,  434. 
Stevens  v.  Beals,  SO. 
Stevens  v.  Hannaa,  497. 
Stevens  v.  Gregg,  21. 
Stevens  v.  Monongahela  Bk.,  271. 
Stevens  v.  Park,  465. 
Stevens  v.  Stevens,  204. 
Stevenson  v.  O'Neill,  215,  27L 
Stewart  v.  Allison,  341. 
Stewart  v.  Babbs,  68. 
Stewart  v.  Bramhall,  214. 
Stewart  v.  Eden.  365. 
Stewart  v.  First  Nat.  Bk.,  408. 
Stewart  v.  Kennett,  376. 
Stewart  v.  Lansing,  274. 
Stewart  v.  Smith,  59,  465. 
Stewart  v.  Street,  144. 
Stiger  V.  Bent,  499. 
Still  well  r.  Aaron,  434. 
Stillwell  V.  How,  217. 
Stimson  V.  Whitney,  92,  207. 
Stinson  v.  Lee,  309.  ■ 
Stix  V.  Matthews,  342,  359,  363. 
St.  John  V.  Roberts,  305,  360,  498. 
St.  Louis  Nat.  Bk.  v.  Flanagan,  433. 
St.  Louis  Stock  Yards  v,  O'Reilly,  176. 
Stockdale  v.  Keyes,  92. 
Stockton  Sav.  &c.  Soc.  v.  Giddings,  37, 

38. 
Stoddard  v.  Kimball,  155,  26L 
Stoddard  v.  Penniman,  410. 
Stokes  V.  Pottery  Co.,  131. 
Stone  V.  Clough,  501. 
Stone  V.  Elliott,  272. 
Stone  V.  White,  149. 
Stoneman  v.  Pyle,  59,  61. 
Stoney  v.  Am.  L.  Ins.  Co.,  96. 
Stoney  Island  Hotel  Co.  v,  Johnson,  13. 
Storer  v.  Mil  liken,  433. 
Storey  v.  Krewson,  501. 
Storrs  V.  Flint,  104. 
Story  V.  Baird,  80. 
Story  V.  Lamb,  212. 
Story  V.  Livingston,  196. 
Stratton  i\  McMakin,414. 
Straughan  v.  Fairchild,  155. 
Stroh  V.  Hinchman,  86. 
Strohm  v.  Hayes,  41. 
Strong  V.  King,  184,  349. 
Strong  V.  Straus,  270. 
Stuber  r.  Schock,  434. 
Stults  V.  Silva,  26. 


TABLE    OF    CASES    CITED. 


References 

stamp  V.  Richardson  Co.  I5k.,  432,  436. 
Sturges  r.  Fourth  Nat.  Bank,  177. 
Sturges  r.  MlHer,  201,  248,  262. 
Sturglsr.  Bank  of  Clrclevillc,  97. 
Sturtevant  v.  Jaques,  105. 
Suffcll  V.  Bank  of  England,  412. 
Suffolk  Bk.  V.  Worcester  Bk.,305. 
Sullivan  V.  Cement  Co.,  451. 
Sullivan  v.  Langley,  274. 
Sullivan  V.  Rudlsell,  407. 
Sulsbacher  v.  Bank,  317. 
Sulzbachcr  v.  Bk.  of  Charleston,  385. 
Sumnierhlll  v.  Tapp,  15. 
Supervisors  v.  Schenck,  86,  96. 
Susquehanna  Fert.  Co.  v.  White,  603. 
Susquehanna  Val.   Bk.  v.    Looniis,  215, 

384. 
Sussex  Bank  v.  Baldwin,  313. 
Sutcllffe  V.  McDowell, 398. 
SuHlffc  v.  Atwood,  502. 
Sutton  V.  Owen,  212. 

Swampscott  Mach.  Co.  v.  Rice,  366,  372. 
Swan  V.  Hodges,  347,  349,  388. 
Swanzcy  v.  Parker,  109. 
Swayze  v.  Brlllon,  358.  359,  364. 
Sweeney  v.  R  ister,  221. 
Sweeney  v.  Tlilckstun,  30. 
Sweet  1'.  Hooper,  305. 
Sweet  V.  Swift  (In  full),  187. 
Sweet  V.  Swift,  1G6. 
Sweet  V.  Woodin,  216,  386. 
Sweetser  v.  French,  33,  54, 145. 
Swift  V.  Crocker,  435. 
Swift  f.  Smith,  257. 
Swift  V.  Tyson,  152,  1.54,  262. 
Swope  V.  Lefflngwell,  496,  497. 
Swopc  V.  Ross,  166. 
Sykes  v.  Giles,  85. 
Sylvester  r.  Crohan,  363, 366. 
Sylvester  v.  Staples,  35. 
Syme  v.  Brown,  225. 
Sypert  v.  Harrison,  427. 
Syracuse  &c.  R.  R.  Co.  v.  Collins,  466. 

T 

Taber  v.  Cannon,  84. 

Tabor  r.  Merchants'  Nat.  Bk.,  252. 

Taddiken  v.  Cantrell,  408. 

Taft  r.  Brewster,  122,  123. 

Talbot  V.  Gay,  430. 

Talbot  V.  Nat.  Bank.  312. 

Tappan  v.  Bank,  117. 

Tappam  v.  Ely,  220. 

Tardy  v.  Boyd,  392. 

Tarleton  v.  Southern  Bank,  82. 

Tassey  v.  Church,  106. 

Tate  V.  Evans,  85. 

Tatlock  V.  Harris,  18,  48,  49. 


are  (o  Pages. 

Tatum  V.  Kelley,  146. 

Taunton  Bk.  v.  Richardson,  391. 

Taylor  v.  Blnney,  429. 

Taylor  v.  Clark,  152. 

Taylor  v.  Cribb,  248. 

Taylor  v.  Dausby,  77. 

Taylor  v.  Drake,  176. 

Taylor  v.  French,  389,  391. 

Taylor  t\  Xeblclt,  31. 

Taylor  v.  Newman,  ISO. 

Taylor  i-.  Reese,  200. 

Taylor  V.  Shelton,S7,  104. 

Taylor  r.  Sip,  460,  46.5. 

Taylor  v.  Snyder,  314,  386. 

Taylor  v.  Surget,  107. 

Tebbetts  v.  Dowd,  378. 

Temple  v.  Fomroy,  84, 

Terry  v.  AUis,  201. 

Terry  v.  Blssell,  199,  214. 

Tescher  v.  Merca,  22. 

Tevis  V.  Young,  12,  13. 

Texas  t'.  Hardenberg,  263. 

Thacher  v.  Stevens,  224. 

Thatcher  r.  West  River  N.  Bk.,  150,  271. 

Thayer  v.  Brackett,  501. 

Thayer  v.  King,  393. 

Thayer  r.  Smith,  93. 

Theall  v.  Newell,  234 

The  Floyd  Acceptances,  101. 

Third  Nat.  Bank  r.  Allen,  415. 

Third  Nat.  Bank  v.  Angell,  205. 

Tlilrd  Nat.  Bank  v.  Ashworth,  392. 

Third  Nat.  Bank  v.  Harrison,  145. 

Third  Nat.  Bank  v.  Lange,  270. 

Third  Nat.  Bank  v.  Nat.  Bank,  221. 

Third  Nat.  Bank  v.  Snyder,  91. 

Thomas  r.  Relfe,  107. 

Thomas  v.  Walkins,  37,  145. 

Thompson  v.  Bank  of  British  N.  Am.,  84. 

Thompson  v  Elliott,  85. 

Thompson  v.  Gray.  155. 

Thompson  v.  Ketcham,  24. 

Thompson  v.  Sioux  Falls  N.  B.,  152,270. 

Thompson  v.  >loan,  32. 

Thompson  v.  Stewart,  382. 

Thompson    &   Walkup   Co.  v.  Appleby, 

364,  365. 
Thompson-Houston  Elec.  Co.  v.  Capital 

Elec.  Co.,  201. 
Thornburg  v.  Emmons,  315. 
Thornton  v.  Dick,  193. 
Thornton  v.  Rankin,  105. 
Thrall  r.  Horton,  271. 
Thrall  r.  Mead,  265,  267. 
Thurston  r.  Island,  429. 
Thurston  v.  Mauro,  88. 
Tlcknor  r.  Roberts,  343. 
Tlconlc  IJank  v.  Smiley,  215. 
Tildcn  v.  Barnard,  98,  269,  274. 


TABLE    OF    CASES    CITED. 


References 

Tilford  V.  Miller,  503. 
Tinsley  v.  Klrby,  444. 
Tisdale  V.  Maxwell,  18. 
Timberlake  v.  Thayer,  499. 
Tinims  v.  Dellsle,  369. 
Tindal  v.  Brown,  376. 
Tinker  v.  McCauley,  429. 
Tisdale  v.  Maxwell,  502. 
Titus  t'.  Kyle,  236. 
Tobey  v.  Barber,  503,504. 
Tobey  v.  Berley,  372. 
Tobey  «.  Chlpman,  255. 
Tobey  V.  Lennig,  370. 
Tod  V.  Wiclj,  258,  265. 
Todd  V.  Neal's  Admr.,  340. 
Toledo  Agrl.  Works  v.  Heisser,  88. 
Tolman  v.  Hanrahan,  93,  173. 
Tomlin  r.  Thornton,  466. 
Tooke  V.  Bonds,  500. 
Toomer  v.  Rutland,  407. 
Toombs  V.  West,  145. 
Torotell  ex  parte,  26. 
Torrey  v.  Association,  117. 
Torrey  v.  Foss,  384. 
Tourtelot  v.  Reed,  271. 
Towle  V.  Dresser,  76. 
Towne  v.  Rice,  5,  98, 104. 
Town  of  Eagle  t\  Kohu,  146. 
Town  of  New  Athens  v.  Thomas,  99. 
Townsend  r.  Auld,  339,  366,  372. 
Townsend  v.  Bank  of  Racine,  198. 
Townsend  v.  Darby,  143,  438. 
Townsend  v.  Hcrr,  370. 
Townsend  v.  Lorain  Bk.,  371. 
Townsend  v.  Star  Wagon  Co.,  411. 
Townsley  v.  Samrall,  179,  343. 
Trammel  v.  Chipman,  304. 
Traskv.  Martin,  315. 
Trebilcock  v.  Wilson,  500. 
Tredway  v.  Antlsdel,  499. 
Trego  V.  Lowery,  148. 
Trent  Tile  Co.  v.   Fort   Dearborn 
'     Nat.  Bk.  of  €liicago  (infull),  192. 
Trent  Tile  Co.  v.  Fort  Dearborn  N.  Bk., 

175. 
Trigg  V.  Saxton,  155. 
Trimble  v.  Thome,  426. 
Tripp  V.  Swanzey  Mfg.  Co.,  100. 
Troy   City  Bk.  v.  Lanman,  180,  311,  411. 
True  V.  Collins,  367. 
Truesdell  v.  Thompson,  197. 
Trust   Co.  V.   National  Bank,  219,    291, 

429. 
Trustees  of  Cahokla  v.  Rantenberg,  88, 

98. 
Tryon  v.  Oxley,  106. 
Tucker  v.  Raleigh,  103. 
Tucker  v.  Tucker,  24. 
Tucker  v.  Oxley,  106. 

Ivi 


are  to  Pages. 

Tucker  v.  Raleigh,  103. 

Tucker  v.  Tucker,  24. 

Tuckerman  v.  Hartwell,  66,  67. 

Tucker  Mfg.  Co.  v.  Fairbanks,  98. 

Tunno  t'.  Lague,  382. 

Turle  V.  Sargent,  155. 

TurnbuU  v.  Bowyer,  384. 

Turnbull  v.  Brock,  434. 

TurnbuU  v.  Maddux,  392. 

Turner  v.  Iron  Chief  Min.  Co.,  266. 

Turner  v.  Keller,  214. 

Turner  v.  New  Farmers'  Bank,  505. 

Turners.  Wilcox,  86. 

Turner,  Wilson  &  Co.  v.  Browder,  148, 

166. 
Tuscaloosa     Cotton-seed     Oil     Co.    v. 

Perry,  501. 
Tyler  v.  Gould,  166. 
Tyson  v.  Oliver,  368. 

u 

Ulrich  V.  Hower,  176. 

Union  Bank  v.  Barber,  274. 

Union  Bank  v.  Fowlkes,  345. 

Union  Bank«.  Hyde,  338,  390. 

Union  Bank  v.  Magruder,  390. 

Union  Bank  v.  Roberts,  408. 

Union  Bankr.  Willis,  168.  360. 

Union  Bank  of  Rochester  v.  Gilbert,  146. 

Union  Nat.  Bank  v.  Barber,  155. 

Union  Nat.  Bank  v.  Brown,  146. 

Union  Nat.  Bank  y.  First  N.  Bk.,  428. 

Union  Nat.  Bank  v.  Grant,  220. 

Union    Nat.    Bank   v.  Oceana  Co.    Bk., 

472,   495. 
Union  Nat.  Bank  v.  Roberts,  411. 
United   States   v.   Bank  of  Metropolis, 

100,  180. 
United  States  v.  Barker,  167. 
United  States  v.  Central  Nat.  Bank,  100. 
United  States  v.  Isham,  465. 
United  States  v.  Linn,  409. 
United  States  v.  Onondaga  Co.  Sav.  Bk., 

414,  415. 
United  States  v.  Turner,  406. 
United  States  v.  U.  P.  R.  R.  Co.,  lOS. 
United  States  v.  White,  17,  21. 
United  States  Bank  v.  Barker,  362. 
United  States  Nat.  Bank  v.  Burton,  366. 
United  States  Nat.  Bank  v.  Crosley,  221. 
United  States  Nat.  Bank  v.  Ewing,  155 
United   States   Nat.  Bank  v.  First  Nat. 

Bank,  148. 
United  States  Nat.  Bk.  v.  McNalr,  151, 

258,  261. 
United  States  Trust  Co.  v.  Roche,  104. 
Unsdell  v.  Cunningham,  27. 
Updegraf  t  v.  Edwards,  203. 


TABLE    OF    CASES    CITED. 


References 


y 


Vagllano  v.  Bank  of  England,  19. 

Valle  V.  Cerre,  178. 

Van  Boekkellen  v.  Taylor,  36. 

Van  Brunt  v.  Slngley,  254. 

Van  Burkleo  v.  S.  W.  Mfg.  Co.,  153. 

Vance  r.  Collins,  364. 

Vance  v.  First  Nat.  Bk.,  263. 

Vance  v.  Wells,  80. 

Vandewatcr  v.  McRae,  228. 

Van  Duzer  v.  Howe,  182,  252. 

Van  Meter  v.  Spurrier,  145. 

Van  Patton  v.  Reals,  78. 

Van  Patten  v.  Ulrich,  217. 

Van  Riper  v.  Baldwin,  200. 

Vaustrum  v.  Liljengren,  177,  ISO,  183. 

Van  Vechten  v.  Pruvn,  365,  366,  367. 

VanZandtv.  Hopkins,  24. 

Varley  v.  Title  Guarantee  &  T.  Co.,  225. 

Vaughan  v.  Fowler,  444. 

Veazie  Bank  v.  Paulk,  269. 

Vere  v.  Lewis,  49. 

Vletsr.  Bank,  423. 

Vinton  V.  King,  267. 

Violett  V.  Patten,  428. 

Vischerv.  Webster,  413. 

Vogle  V.  Ripper,  407,  408,  417. 

Voeltz  V.  Harris,  431. 

Vollz  V.  National  Bank  of  Illinois 

(In  full),  508. 
Voltzt'.  Nat.  Bank,  497. 
Von  Sachs  v.  Kretz,  404. 
Voorhces  V.  Woodhull,  205. 
Vosburgh  v   Dleffendorf,  274. 
Voss  V.  Lewis,  436. 


w 


Wade  V.  Chicago,  &c.  R.  R.  Co  ,  261. 
Wadev.  Creighton,226. 
Wade  V.  Guppinger,  211. 
Wade  V.  Wade,  393. 
Wadsworth  v.  Sharpsteen,  78. 
Wagner  v.  Crook,  468. 
Wagner  v.  Simmons,  155. 
Wainwrlghtv    Straw,  24. 
Walnwrlght  v.  Webster,  198. 
Walt  V.  Pomeroy,  65,66,  411. 
Waiter.  Foster, 233. 
Waitet'.  Kalmisky,  150. 
Wakefield  v.  Greenhood,  176. 
AValker  v.  Bank  of  State  of  N.  Y.,  98. 
Walker  r.  Bradbury,  354. 
Walker  r.  Eberly,253. 
Walker  v.  Kee,  203,  257. 
Walker  v.  Krebaum,  219. 
Walker  v.  Patterson,  106. 
Walker  r.  Stetson,  166,  372,  385. 


are  to  Pages. 

Walker  v.  Thompson,  30. 

Walker  v.  Wills,  304. 

Walker  r.  Wilson,  263. 

Walker  v.  Woollen, 400. 

Wall  V.  Monroe.  104. 

Wallace  v.  Agry,  171. 

Wallace  v.  Crilley,  317, 371. 

Wallace  v.  Douglass,  180. 

Wallace  v.  Grlzzard,  499. 

Wallace  v.  Jewell,  410. 

Wallace  v.  McConnell,  180,  320,  426. 

Wallis  V.  Llttell,  138. 

Walmsley  v.  Acton,  342. 

Walnut  V.  Wade,  197. 

Walrad  v.  Petrie,  18. 

Walsh  V.  Blatchley,  5,  172. 

Walsh  V.  Dart,  170, 171,314,  315. 

Walters  v.  Brown,  364. 

Walters  V.  Short,  409. 

Walton  V.  Williams,  16,  181. 

Wanzer  v.  Tupper,  339. 

Ward  V.  Allen,  177. 

Wardr.  Bourne,  502. 

Ward  V.  Doane,  214. 

Wardv.  Howard,  501. 

Ward  V.  Johnson,  95. 

Ward  V.  Smith,  245,  304,  494,  495. 

Ward  V.  Sparks,  315. 

Warden  v.  Tucker,  383. 

Ware  v.  McCormack,216. 

Ware  f.  Street,  198. 

Waring  v.  Belts  (In  full),  332. 

Waring  r.  Betts,  313,  318. 

Warnick  v.  Crane,  342. 

Warren  v.  Brown,  31. 

Warren  v   Durfee,  205. 

Warren  v.  Haight,  263. 

Warren  v .  Lynch,  35. 

Warren  v.  Scott,  21. 

Warren  Co.  v.  Marcy,  272. 

Warrcnsburg  &c.  Assn.  v.  ZoU,  386. 

Warring  v.  WlUlamB,  408. 

Warrington  v.  Early,  53. 

Washburn  v.  Alden,  84. 

Washington  Bank  v.  Krum,  151. 

Washington  Mutual  Fire  Ins.  Co.  v.  St. 

Mary's  Seminary,  131, 133. 
Washington  Sav.  Bk.  v.  Ekey,  413. 
Watervliet  Bank  v.  White,  197,  463. 
Watkins  v.  Halstead,  80. 
Watkins  v.  Manle,  293. 
Watkins  v.  Parsons,  605. 
Watrous  V.  Holbrook,  16. 
Watson  V.  Alley  (In  full),  294. 
Watson  V.  Brown,  342. 
Watson  V.  Cbesire  (in full),  231 
Watson  V.  Cheshire,  214,  216. 
Watson  V.  Iloag,  251. 
Watson  V.  Lorlng,  339. 

Ivii 


TABLE    OF    CASES    CITED. 


References 

Watson  V.  Tarpley,  339. 

Watt  V.  Gaus,  465,  468. 

Watt  V.  Klrby,  44. 

Way  V.  Bachelder,  66. 

Way  V.  Butterworth,  224,  311,  312,  331. 

Way  V.  Towle,  459. 

Wayne  Agricultural  Co.  v.  Cardell,  248. 

Weader  v.  First  Nat.  Bank  (in  full), 

206. 
Weader  v.  First  Nat.  Bank,  203. 
Weaver  v.  Barden,  268. 
Weaver  v.  Bromley,  411. 
Weaver  r.  Penn,  361. 
W(!aver  v.  Scott,  22. 
Webb  V.  Mears,  172. 
W.;bb  V.  Spicer,  73. 
Webber  v.  Gotthold,  367. 
Weber  v.  Bank,  512. 
Webster  v.  Bailey,  144. 
Webster  v.  Bainbridge,  154. 
Webster  v.  College,  117. 
Weed  V.  Bond.  146. 
Weeks  v.  Medler,  202. 
Weems  v.  Farmers  Bk.,  309. 
Weems  v.  Parker,  24. 
Weems  v.  Shanghnessy,  248. 
Wagner  r.  Biering,  147. 
Weldler  v.  Kanffman,  196. 
Weill  V.  Trosclair,  150, 
Weinhauser  v.  Morrison,  176. 
Welch  V.  Alhngton,  502. 
Welcli  V.  Dameron,  37. 
Welch  V.  Goodwin,  414. 
Welch  V.  Lindo,  215,  233,  235. 
Welch  V.  Taylor  Mfg.  Co.,  383. 
Wellington  v.  Jackson,  409,  414. 
Wells  V.  Brigham,  180,  460. 
Wells  V.  Davis,  390. 
Welsh  V.  Ebersole,  225. 
Welsh  V.  German  Am.  Bk.,  414. 
West  V.  Brown,  362. 
West  Boston  Sav.  Inst.  r.  Thompson, 

498. 
West  Branch  Bk.  v.  Fulmer,  384. 
Western  Cottage  Organ  Co.  v.  Reddish, 

94. 
Western  Min.  Co.  v.  Toole,  172. 
Westfall  V.  Braley,  198. 
Westminster  Bk.  i:  Wheaton,  459. 
Westmoreland  v.  Foster,  105,270. 
Weston  V.  Hight,  211. 
Weston  V.  Meyers,  13,  14,  252. 
Weston  V.  Wiley,  504. 
West  Phlla.  N.  Bk.  v.  Field,  414. 
West  River  Bank  v.  Taylor,  362. 
West  St.  Louis  Sav.  Bank  v.  Shawnee 

Co.  Bank,  86,  95,  97. 
Wetherall  v.  Claggett,  342. 
Wetter  v.  Klley,  197. 

Iviii 


are  to  Pages. 

Wetumpka  &c.   R.   R.  Co.  v.  Bingham, 

100. 
Weyerhausen  v.  Dan,  505. 
Whayley  v.  Houston,  309,  469. 
Wharton  v.  Morris,  32. 
Whealley  v.  Strobe,  22. 
Wheeler  v.  Guild,  460,  50i. 
Wheeler  v.  Newbould,  299. 
Wheeler  i».  Reed,  126. 
Wheeler  v.  Webster,  16, 173,  177. 
Wheeless  v.  Williams,  416. 
Wheelock  v.  Freeman,  407. 
Whilden  v.  Merchants  &c.  Bank,  176. 
Whisler  r.  Bragg,  212. 
Whistler  v.  Forster,  291. 
White  V.  Bank,  243. 
White  V.  Continental  Nat.  Bk.,  182,  183, 

407. 
White  V.  Gushing,  24. 
Whiter.  Haas,  409,  4n. 
White  V.  Hopkins,  432. 
White  r.  Keiih,392. 
White  V.  Madison,  87. 
White  V.  Miners'  Nafl  Bk.,  221. 
White  V.  National  Bk.,  221. 
White  V.  Stoddard.  307,  359,  387. 
White  r.  Vermont  &c.  R.  R.  Co.,  40,99. 
AVhiteley  v.  Allen,  390. 
Whitford  v.  Laidler,  99. 
Whitmore  v.  Nickerson,  13. 
Whitney  v.  Essen,  505. 
Whitney  r.  Wyman,  87. 
Whittier  v.  Collins,  264,  359,  388,  391,  392. 
Whittmer  v.  Ellison,  434. 
Whitwell  V.  Johnson,  318. 
Whitworth  v.  Adams,  259. 
Widoe  r.  Webb,  146. 
Wilcox  V.  Aultman,  501. 
Wilcox  V.  Williams,  311. 
Wilcoxen  v.  Logan,  497. 
Wild  V.  Howe,  434. 
Wilde  V.  Armsby,  409. 
Wilder  V.  Cowles,  200. 
Wilder  V.  Weakley,  78. 
Wiles  V.  Robinson,  502. 
Wilhelms  v.  Schmidt,  503. 
Wilkie  V.  Chandon,  391. 
Wilkins  V.  Casey,  175. 
Wilkins  V.  Commercial  Bank,  360. 
Wilkins  v.  McGuire,  304. 
Wilkinson  v.  Johnson,  234. 
Willet  V.  Shepard,  409. 
Williams  v.  Bank  of  U.  S.,  363.  367. 
Williams  V.  Cheney,  116. 
Williams  v.  Drexel,  182, 183. 
Williams  V.  Forbes,  145. 
Williams  v.  Gallyonter.lSl. 
Williams  V.  Germain,  181. 
Williams  v.  Lewis,  390. 


TABLE    OF   CASES    CITED. 


References 

Williams  v.  Matthews,  360. 

WilUiims  V.  Merchants'  Xat.  Bk  ,  216. 

Williams  v.  Mobile  Sav.  Bank,  82. 

Williams  V.  Potter,  221. 

Williams  V.  Putnam,  338. 

Williams  v.  Robblns,  88,  136. 

Williams  r.  Second  Nat.  Bank,  98. 

Williams  V.  Triplett,  323. 

Williams  v.  Williams,  H9,  427. 

Williams  f.  Winans,  174,  176. 

Williamson  v.  Cllnc,  35. 

Williamson  v.  Smith,  54. 

Williamson  v.  Watts,  77. 

Willlamsport  v.  Com.,  102, 103. 

Wllliamsport  Gas  Co.  v.  Pinkerton,  304. 

Willis  f.  Ftnley,467. 

Willis  V.  Heatli  (in  fall),  208. 

Willis  r.  Willis,  216,  499. 

Wllloughby  V.  Moulton,  13. 

Wilson  V.  Codman's  Exrs.,  215. 

Wilson  V.  Harris,  409. 

Wilson  V.  Holmes,  221. 

Wilson  V.  Kinscy,  282. 

Wilson  V.  Law,  414. 

Wilson  t'.  Mechanics'  Sav.  Bk.,  264. 

Wilson  V.  Powers,  138,  434. 

Wilson  V.  Ralph,  212. 

Wilson  V.  Richards,  366. 

Wilson  V.  Senior,  360,  388. 
Wilson  r.  Wilson,  143. 

Wilson  Co.  V.  National  Bank,  21. 
Wlnchell  v.  Carey,  39. 

Winders  v.  Sperry,  149. 
Windham  Bk.  v.  Norton,  314,387. 

Wlngr.  Ford,  257. 

Wlngo  I'.  McDowell,  144. 

WIneted  Bk.  v.  Webb,  502. 

Winter  r.  Pool,  413. 

Wlntcrmnte  v.  Post,  180. 

Wiseman  v.  Chlappella,  168,  313,  347,  349. 

WIthlngton  v.  Herring,  85. 

Wltkowsky  v.  Maxwell,  314,  342. 

Witter.  Williams,  262. 

Wittcy  V.  Mich.  Mat.  L.  I.  Co.,  21. 

WIttram  v.  Van  Wornier,  44. 

Hilly  V.  .Mlohi^an  nut.  L..  lus.  Co. 

(In  full),  62. 
Wolcott  r.  Van  Santvoord,  303,  312. 
Wolff.  Hostetter,  216. 
Wolfe  V.  Jewctt,  169,  367. 
Wolfe  V.  Wllscy,  9. 
Wood  f.  Bodwcll,  209. 
Wood  V.  Callaghan,  :«9,  366. 
Wood  t'.  Duval,  201. 
Wood  V.  Mechanics'  Ac.  Co.,  304. 
Woodf.  Pugh,  182. 
Wood  r.  Steele,  410. 

Woodard  f.  GrllTlths  etc.  Com.  Co.,  178. 
Woodburn  v.  Woodburn,  .504. 


are  to  Pages. 

Woodford  v.  Dorwin,  37. 

Woodman  v.  Thurston,  389,  390. 

Wood    River    Bank  v.   First  Nat 
Bank  (In  full),  354. 

Wood  River  Bank  v.  Flr->t  Nat.  Bk.,  338, 
343,  344,  460. 

Woodrutf  f.  King,  197. 

Woodruff  V.  Merchants'  Bk.,  314. 

Woodruff  V.  Munroe,  255,  414. 

Woods  V.  Armstrong,  146. 

Woods  V.  North,  29. 

Woods  r.  Wilder,  83. 

W^oods  V.  Woods,  224,  498,  503. 

Woodworth    r.    Bank    of    America,  66, 
409,  411. 

Woodworth  v.  Hantoon,  294. 

Woolen  V.  Ulrlch,  271. 

Wooley  V.  Cobb,  152. 

Woolf  V.  Schaeffer,  442. 

Woolley  V.  Clements,  316. 

Wooten  V.  Walters,  493. 

Worcester  Bank  r.  Wells,  177. 

Worcester  Co.   Bk.  v.  Dorchester  etc. 

Bk.,  250,  274. 
Worcester  Nat.  Bk.  v.  Cheney,  154,  155. 
Worden  v.  Salter,  2:6. 
Workingmen's  Bk.  r.  Blell,  392. 
Workman  v.  Wright,  256,  414. 
Works  V.  Ilershey,  27,  265. 
Worthlngton  v.  Cowles,  200. 
Worthlngton  v.  Gowlcs,  199. 
Wright  V.  Anderson,  384. 
Wright  v.  Andrews,  388. 
Wright  V.  Brosseau,  44. 
Wright  V.  Dyer,  430,  431. 
Wright  t\  Hart,  30. 
Wright  f.  Irwin,  26,  274. 
Wright  r.  Railway  Co.,  513. 
Wright  V.  Shawcross,  363. 
Wright  V.  Wright,  393. 
Wulschuer  v.  Sells,  203,  207,  211. 
Wyman  v.  Adams,  384. 
Wyman  r.  Goodrich,  427. 
Wyman  v.  Robblns,  263. 
Wyman  v.  Yeomans,  410. 
Wynne  v.  Ralkes,  179. 

Y 

Yale  V.  Ward,  5. 

Yates  V.  Dalton,  91. 

Yates  V.  Donaldson,  432. 

Yeager  v.  Farwell,  392. 

Yeaton  v.  Berney,  180,  304. 

Yellowstone    Nat.    Bank    v.     Gagnon, 

153. 
Yerkes  i:  Blodgett,  393. 
Yocum  r.  Smith,  413. 
York  V.  Jones,  410. 

lix 


TABLE    OF    CASES    CITED. 


Yorkshire  Banking  Co. 
Young  ».  Adams,  198. 
Young  V.  Bennett,  312. 
Young  V.  Brown,  428. 
Young  V.  Bryan,  338. 
Young  V.  Cole,  199,  234. 
Young  V.  Harris,  113.  ■ 
Young  V.  Lehman,  182. 
Young  V.  Morgan,  492. 
Young  V.  Ward,  174. 

Ix 


References  are  to  Pages. 

,  Beason,  93.        |    Youngs  v.  Lee,  370,  371. 
Younker  v.  Martin,  201. 

z 


Zabriskie  v.  Cleveland  etc.  R.  R.  Co.  ,96. 
Zimmerman  v.  Anderson,  30. 
Zimmerman  v.  Rate,  65,  413. 
Zlmpleman  v.  Veeder,  299. 
Zuel  V.  Bowen,  91. 


THE 

LAW  OF  BILLS  AND  NOTES, 

CHECKS. 


CHAPTER     I. 

GENERAL  CHARACTERISTICS  OF  BILLS  AND  NOTES. 

Section  1.  What  is  money.  * 

2.  Commercial  paper  defined. 

3.  Bills  of  exchange  —  Foreign  and  inland  bills. 
i.  Forms  of  bills  of  exchange. 

5.  The  effect  of  a  bill  —  When  does  it  operate  as  an  equitable 

assignment. 

6.  Promissory  notes  defined. 

7.  Form  of  a  promissory  note. 

§  1.  What  is  money. —  Money  may  be  defined  to  be 
"  any  material  that  by  agreement  serves  as  a  common 
medium  of  exchange  and  measure  of  value  in  trade."  ^ 
In  the  early  days  of  every  nation,  trade  took  the  form 
of  barter,  i.  e.,  one  thing  which  A.  had  to  sell  and  B. 
wanted  to  buy,  would  be  exchanged  for  another  which 
B.  wanted  to  sell,  and  A.  wanted  to  buy,  the  qmintities 
of  the  two  things  thereby  exchanged  being  determined 
by  the  parties  themselves,  according  to  their  estimates 
of  the  relative  values  of  the  commodities.  As  a  cer- 
tain commodity  came  into  general  demand,  it  finally  became 
a  measure  of  value  for  other  commodities,  and  when  its 
quantity  was  definitely  determined    by  the  stamp  of  the 

1  Standard  Dictionary. 


§    1  CHARACTERISTICS    OF    BILLS    AND    NOTES.  [CH.   I. 

government,  it  assumed  the  characteristics  of  money  as  we 
now  know  it.  Instead  of  barter  or  exchange  of  goods  in 
general,  A.  would  sell  B.  what  he  had  to  sell  for  a  certain 
quantity  of  the  commodity  called  money,  and  he  would  buy 
from  B.  or  any  one  else  what  he  wanted,  paying  for  it  some 
of  the  money  which  he  had  acquired  by  his  sale  of  his  own 
goods. 

Various  things  of  intrinsic  value  were  used  at  different 
times  as  money;  but  finally  gold,  silver  and  copper  became 
the  common  materials  of  money,  and  this  is  the  universal 
practice  of  the  present  day.^ 

The  most  striking  characteristic  of  money  is  its  currency, 
its  easy  circulation  from  hand  to  hand  for  whatever  it  is 
worth.  It  has  always  been  the  rule  of  law  in  England  and 
in  this  country,  that  the  purchaser  of  a  chattel,  of  a  horse 
or  a  cow,  could  acquire  no  better  title  to  it,  than  what  his 
vendor  possessed.  And  if  the  vendor's  title  was  defective 
for  any  reason,  because  he  had  stolen  or  ap})ropriated  what 
belonged  to  another,  the  good  faith  of  the  vendee  and 
his  ignorance  of  the  wrongful  ap})ropriation  would  not 
furnish  him  with  any  defense  to  the  real  owner's  action  of 
trover  or  replevin.^ 

On  the  other  hand,  it  is  probably  the  law  in  all  civilized 
communities  that  money  is  not  subject  to  this  rule.  If  one 
misappropriates  money  belonging  to  another,  and  transfers 
it  for  value  to  a  third  person,  who  receives  it  in  good  faith 
and  without  knowledge  of  the  true  ownership,  the  third 
person  acquires  an  absolute  title  to  it  against  even  the  true 
owner.  The  true  owner  can  only  recover  it  of  those  who 
receive  it  with  actual  or  constructive  notice  of  the  defect  of 
title  or  without  consideration. 

^  It  may  be  advi&able  to  state  that  there  is  no  intention  here  to  dis- 
pute the  proposition  that  United  States  Treasury  notes  are  properly 
described  as  money.     As  to  which,  see  infra,  §  22. 

2  See  Tiedeman  on  Sales,  Chapter  XXI.,  and  in  particular  §§  310-316. 
There  was  an  exception  to  this  rule  recognized  by  the  English  law,  in  the 
case  of  goods  sold  in  the  open  market  or  fair.  But  this  exception  does 
not  exist  in  the  United  States,  and  the  rule  above  stated  is  universally 
enforced.  Tiedeman  on  Sales,  §  31L 
2 


CH.  I.]  CHARACTERISTICS    OF    BILLS    AND    NOTES.  §   3 

§  2.  Commercial  paper  defined. —  As  the  demands  of 
commerce  for  the  medium  of  exchange  increased,  the  actual 
transfer  of  money  in  payment  of  debts,  particularly  where 
the  transactions  arose  between  parties  living  in  distant 
places,  became  inconvenient,  and  finally,  on  account  of  the 
limited  quantity  of  money  in  existence,  absolutely  impos- 
sible. As  a  substitute  for  money,  certain  obligations  of 
individuals  to  pay  money  were  transferred  in  payment  of 
debts.  These  obligations  are  now  known  as  commercial 
paper.  /Commercial  paper  may  therefore  be  defined  to 
include  all  those  instruments  of  indebtedness  which  are 
treated  and  used,  in  the  commerce  of  the  world,  as  the 
equivalents  or  representatives  of  money,  or  which  are  given 
the  characteristics  of  money  in  the  furtherance  of  com- 
mercial ends.  In  the  course  of  time  and  of  the  develop- 
ment of  international  commerce,  a  great  many  other  kinds 
of  commercial  paper  have  been  invented  and  adopted  by 
the  commercial  world,  to  which  the  distinctive  characteris- 
tics of  money  have  been  more  or  less  given  ;  such  as  coupon 
bonds,  certificates  of  deposit,  bills  of  lading,  receivers'  cer- 
tificates, government  warrants,  and  the  like  ;  ^  but  inasmuch 
as  this  book  is  prepared  for  the  use  of  students  in  law 
schools,  the  only  kinds  of  commercial  paper  which  will  be 
discussed  and  explained  here,  are  bills  of  exchange,  prom- 
issory notes,  and  checks.  Inasnmch  as  checks  are  a  species 
of  bills  of  exchange,  with  material  modifications,  the  book 
is  called  a  treatise  on  Bills  and  Notes. 

§  3.   Bills  of  exchange  —  Foreign  and  inland  bills. — 

,  A  bill  of  exchange  is  an  unconditional  written  order  by 
\  one  person  on  another,  directing  him  to  pay  to  a  third 
person  or  to  his  order,  or  to  the  bearer,  the  sura  of  money 
therein  named!  He  who  draws  the  bill  is  called  the 
drawer;  the  person  on  whom  it  is  drawn,  the  drawee^  and 
the  one  in  whose  favor  it  is  drawn,  or  to  whom  or  to 
whose  order  the  money  is  to  be  paid,  ihQ  payee.  Until  the 
drawee    agrees  to    honor  or    pay  the  bill,  ho  is  under  no 

^  AH  of  which  are  treated  of  in  Tiedeman's  Commercial  Paper. 

3 


§  3  CHARACTERISTICS    OF   BILLS    AND    NOTES.  [CH.  I. 

obligation  to  the  payee  or  holder.  But  when  he  accepts 
it,  he  binds  himself  to  pay  the  sum  of  money  called  for  by 
the  bill.i 

The  bill  of  exchange  was  first  employed  in  the  settle- 
ment of  international  debts,  by  merchants  living  in  dif- 
ferent countries;  but  they  were  afterwards  used  as  well  in 
domestic  transactions.  There  are,  however,  important 
differences  between  foreign  and  inland  hills.  A  bill  of 
exchange  is  said  to  be  foreign,  when  it  is  drawn  in  one 
country  and  made  payable  in  another.  It  is  an  inland  hill, 
when  it  is  both  drawn  and  made  payable  in  the  same  coun- 
try. A  bill  is  not  foreign  because  parties  to  the  bill  reside 
in  different  countries,  where  it  is  drawn  and  made  payable 
in  the  same  country.  The  residences  of  the  parties  do  not 
control  the  character  of  the  bill.^ 

Formerly  foreign  and  inland  bills  differed  from  each 
other  in  many  other  particulars  ;  but  there  are  but  two  im- 
portant differences  which  need  be  mentioned  in  this  con- 
nection. First,  where  a  bill  is  foreign,  its  interpretation 
and  construction  is  governed  by  the  law  of  the  place 
where  it  is  to  be  paid,  instead  of  the  law  of  the  place  of 
its  execution.  An  inland  hill,  being  paj^able  in  the  place 
where  it  was  drawn,  no  conflict  of  laws  can  arise,  and  its 
construction  and  interpretation  is  always  governed  by  the 
law  of  the  place  where  it  is  drawn.  Secondly,  for  reasons 
given  elsewhere,^  it  is  necessary  to  protest  a  foreign  bill 
of  exchange  for  non-payment,  in  order  to  hold  the  drawer 
and  indorsers  liable,  but  this  is  not  true  of  inland  bills  ; 
and,  as  long  as  local  statutes  have  not  modified  the  law 
merchant,  protest  is  of  no  legal  value  in  the  case  of  inland 
bills. 

1  See  post,  chapter  on  Acceptance. 

2  Scudder  v.  Union  Nat.  Bank,  91  U.  S.  406,  It  must  be  remembered, 
however,  that  where  the  drawee  does  not  reside  in  the  place,  where  the 
bill  is  drawn,  the  bill  is  presumed  to  be  payable  in  the  domicile  or  place 
of  business  of  the  drawee,  unless  some  other  place  of  payment  is  agreed 
upon.  See  Grimshaw  v.  Bender,  6  Mass.  157,  and  post,  chapter  on  Pre- 
sentment for  Payment. 

3  See  post,  chapter  on  Protest. 

4 


CH.  I.]  CHARACTERISTICS    OF    BILLS    AND    KOTES.  §   3 

In  determining  what  are  foreign  bills  of  exchan<j;e,  Ire- 
land  was  held  to  be  foreign  to  England ;  so  that  a  bill 
drawn  in  England  and  payable  in  Ireland,  was  held  to  be  a 
foreijrn  bill  of  exchange.^  The  same  rule  was  laid  do^vn 
generally  by  the  courts  in  this  country',  in  respect  to  the 
States  and  Territories,  which  compose  the  United  States. 
A  bill  drawn  in  New  York,  and  payable  in  Illinois,  is  a 
Ibreign  bill.^ 

If  a  bill  purports  on  its  face  to  be  a  foreign  bill,  no  private 
agreement  as  to  payment  in  the  place  where  the  bill  was 
drawn  will  change  it  to  an  inland  bill,  as  against  sub- 
sequent parties  without  notice.^  If  the  bill  does  not  show 
this  fact,  either  by  statement  of  the  place  of  payment  or 
residence  or  address  of  the  drawee,  its  character  may  be 
established  by  evidence  alnmde,  and  in  the  absence  of  such 
evidence,  it  will  be  presumed  to  be  an  inland  bill.* 

It  does  not  often  happen  that  the  inland  bill  is  issued  in 
duplicate:  but  in  order  to  avoid  the  inconvenience  and 
delay  which  may  be  occasioned  by  the  loss  of  a  foreign 
bill,  it  is  a  common  custom,  particularly  in  bills  drawn  on 
Europe  and  other  distant  countries,  for  the  drawer  to  issue 
several  copies  of  the  bill,  which  are  called  a  sei  of  ex- 
change, and  together  constitute  one  bill.  Either  copy  of 
the  bill  may  be  negotiated,  and  when  any  one  of  them  is 
accepted  and  paid,  all  the  others  are  extinguished,  even 
against  bona  Jide  purchasers,  so  far  as  the  drawer  is 
concerned,  although  the  payee  is  liable  to  each  person, 
to  whom  he  has  transferred  a  copy  of  the  bill.^  The 
drawee  should  accept  only  one  of  the  copies,  and  pay 
the  amount  of  the  bill,  when  the  part  which  he  has  ac- 

1  Mahoney  «.  Ashlin,  2  B.  &  Ad.  378. 

2  Buckner  v.  Finley,  2  Pet.  58G;  Phoenix  Bank  v.  Hussey,  12  Pick. 
483;  Commercial  Bank  v.  Varnum,  49  N.  Y.  269. 

3  See  Towne  v.  Rice,  122  Mass.  67. 

<  Kearney  v.  King,  2  B.  &  Aid.  301;  Rigsiu  v.  Collier,  (5  Mo.  508;  Yale 
V.  Ward,  30  Tex.  17. 

6  Lang  V.  Smylli,  7  Bing.  (20  Eng.  C.  L.  Rep.)  284;  Iloldsworth  v. 
Hunter,  10  B.  &  C.  449;  Walsh  v.  Blatchley,  6  Wis.  423  (70  Am.  Dec- 
469.) 

5 


§   5  CHARACTERISTICS    OF    BILLS    AND    NOTES.  [CH.  I. 

cepted  is  presented  for  payment.  If  he  accepts  more 
than  one  copy,  he  will  be  liable  to  bona  fide  purchasers  on 
as  many  copies  on  which  he  has  written  acceptance. ^  But 
any  copy  may  be  presented  for  acceptance,  and  the  drawee 
may  accept  any  copy. 

§  4.  Forms  of  bills  of  exchange. —  The  following  is  the 
form  of  an  ordinary  bill  of  exchange,  showing  the  accept- 
ance written  across  the  face  :  — 

.   ^        New  York  City, 
$500.  -o  '^   S  Nov.  4,  1896. 

ea    ^     fed 

Ten  days  after  dat^t?  ffBCy  3:o  the  order  of  John  Doe  the 
sura  of  five  hundred  <ioFfei*^,  and  charge  the  same  to  the 

account  of  <   %   % 

^  ^  Richard  Roe. 

To  John  Jackson, 
Chicago,  III. 

The  day  of  payment  may  be  varied,  as  a  bill  may  be 
made  payable  on  demand^  at  sights  at  a  given  date  in  the 
future,  or  at  a  certain  number  of  days  or  months  after 
sighly  after  demand.  When  it  is  a  foreign  bill,  in  addition 
to  what  appears  in  the  form  above  given,  it  reads:  "  pay 
my  first  exchange,  the  second  and  third  remaining  unpaid," 
or  "  pay  my  second  exchange,  the  first  and  third  remaining 
unpaid,"  etc. 

§  5.  The  effect  of  a  bill  of  exchange — When  does  it 
operate  as  an  equitable  assignment.  —  When  a  bill  is  ac- 
cepted, as  is  fully  set  forth  elsewhere,2the  acceptor  becomes 
absolutely  liable  on  the  bill,  irrespective  of  the  financial 
obligations  existing  between  him  and  the  drawer.  But  s^ener- 
ally,  where  one  person  draws  a  bill  of  exchange  on  another, 
to  the  order  of  a  third,  the  drawee  has  funds  belonging 
to  the  drawer,  or  he  is  indebted  to  the  drawer,  in 
an  amount  suflBcient  to    cover    the  sum  of  money  called 

1  Holdsworth  v.  Hunter,  10  B.  &  C.  449;  Davison  w.  Robertson,  3  Dow. 
218;  Wright  v.  McFall,  8  Li.  Ann.  120. 

2  Seeposf,  chapter  on  Acceptance, 

6 


CH.   I.]  CHARACTERISTICS    OF    BILLS    AND    NOTES.  §   6 

for  by  the  bill,  and  the  bill  is  received  by  the  payee,  more 
or  less  in  reliance  upon  this  supposed  fact.  When  the 
drawee  has  accepted  the  bill,  it  does  not  matter  to  the. 
payee  or  holder,  whether  this  supposed  fact  exists  or  not. 
But  if  the  drawee  refuses  to  accept  and  the  drawer  becomes 
insolvent,  it  may  often  occur  that  the  only  effective  remedy 
of  the  payee  of  the  bill  would  be  to  claim  the  right  to  the 
funds  or  obligation  against  which  the  bill  was  drawn,  to  the 
exclusion  of  the  general  creditors  of  the  drawer.  But  in 
order  that  this  end  may  be  attained,  it  is  necessary  to  show 
that  a  bill  of  exchange  operates  as  an  assignment  j^ro  tanto 
of  the  fund  or  debt,  against  which  it  was  drawn.  It  is  im- 
possible to  set  forth  here  the  full  argument ^^ro  and  con  of 
this  proposition  of  the  law.^  It  is  only  possible  here  to 
state  that  the  only  case  in  which  it  is  at  all  possible  for  the 
bill  of  exchange  to  operate  as  an  assignment,  is  where  the 
bill  calls  for  the  payment  of  the  entire  fund  or  debt  against 
which  it  is  drawn.  If  the  bill  calls  for  the  payment  of  a 
part  of  the  fund,  it  cannot  be  treated  as  giving  to  the  payee 
any  claim  against  tlie  fund  or  debt  due  to  the  drawer, 
either  as  a  legal  or  equitable  assignment  pro  tanfo.^  But 
the  cases  are  not  united  even  in  support  of  that  proposition ; 
very  many  cases  holding,  that  in  order  that  a  bill  may 
operate  as  an  equitable  assignment,  it  must  be  drawn  on  a 
particular  fund.^  At  best,  this  theory  of  an  equitable 
assignment,  when  applied  to  bills  of  exchange,  is  not  favor- 
ably considered  by  the  English  and  American  courts.  It 
is  somewhat  more  favorably  considered  in  its  application 
to  checks.^ 

§  6.  Promissory  note  defined. —  A  promissory  note  is 
an  unconditional  promise  to  pay  to  another's  order,  or  to 
bearer,  a  stated  sum  of  money  at  a  specified  or  implied 
time.     The  person  who   executes  the   note  is    called  the 

^  It  is  to  be  found  in  Tiedeman  on  Commercial  Paper,  §§  5-5c. 
2  Niraocks  v.  Woody,  97  N.  C.  1;  Roberts  v.  Austin,  2G  Iowa,  315. 
'  Bull  V.  Tuttle,  81  N.  Y.  454;  Loyd  v.  McCaffrey,  46  Pa.  St.  410. 
*  See  post,  §  176,  and  Tiedeman's  Commercial  Paper,  §  452. 

7 


§  7  CHARACTERISTICS    OF   BILLS    AND   NOTES.  [CH.  I. 

maker f  and  he  to  whom  it  is  made  payable  is  called  the 
payee.  Although  promissory  notes  were  not  used  as  com- 
mercial paper  at  as  early  a  day  as  foreign  bills  of  exchange 
were  brought  into  general  use,  they  did  come  into  general 
use  along  with  inland  bills  of  exchange.  On  their  first 
introduction  into  general  use,  the  application  to  them  of 
the  distinguishing  characteristics  of  money  was  strenuously 
resisted  by  the  English  courts.  And  it  is  even  a  doubt 
now,  whether,  independently  of  statute,  a  promissory  note 
has  the  qualities  of  negotiable  paper.  But  this  has  been 
made  an  academic  question,  almost  devoid  of  practical 
value,  by  the  very  general  statutory  enactment,  ascribing 
to  notes  the  same  character  of  negotiability  as  was  given 
by  the  common  law  merchant  to  bills  of  exchange.  The 
claim  is  made,  that  when  a  note  is  indorsed  it  differs  from 
an  accepted  bill  of  exchange  in  no  other  respect  than  that, 
in  the  indorsed  note,  the  promise  to  pay  precedes  in  point 
of  time  the  order  to  pay  ;  while  in  the  accepted  bill,  the 
order  precedes  the  promise. ^ 

§  7.  Form  of  a  promissory  note. —  The  following  is  the 
form  of  an  ordinary  promissory  note:  — 

$500.  New  York  City,  Nov.  4,  1896. 

Three  months  from  date,  I  promise  to  pay  to  John  Doe 
or  order,  the  sum  of  five  hundred  dollars,  with  interest 
from  date  at  the  rate  of  six  jaer  cent  per  annum. 

Richard  Doe. 

The  time  of  payment  may,  of  course,  as  in  the  case  of 
the  bill  of  exchange,  be  provided  for  in  other  terms,  and 
the  stipulation  for  interest  may  be  left  out.  In  the  suc- 
ceeding chapter,  the  requisites  and  component  parts  of 
bills  and  notes  are  fully  set  forth  and  explained;  and  the 
form  above  given  is  only  illustrative  of  the  general  form  of 
promissory  notes. 

1  Bowers  v.  Industrial  Bank  of  Chicago,  58  111.  App.  498.   For  a  fuller 
explanation  of  this  question,  see  Tiedeman  on  Commercial  Paper,  §  6. 
8 


CH.  I.]  CHARACTERISTICS    OF    BILLS    AND   NOTES.  §   7 

Sometimes  instruments  are  executed  in  ambiguous  forms, 
SO  that  it  is  more  or  less  difficult  for  one  to  determine, 
whether  a  note  or  some  other  legal  instrument  was  intended 
to  be  executed.  Of  course,  the  intention  of  the  parties 
must  be  determined,  and  be  given  effect,  when  it  is  ascer- 
tained. Thus,  where  an  instrument  written  in  the  ordinary 
form  of  a  promissory  note,  except  that  in  the  left-hand 
corner,  at  the  bottom,  the  name  and  address  of  a  third 
person  is  given,  and  this  third  person  has  written  an 
acceptance  across  the  face  of  the  paper,  it  was  held  that, 
the  intention  of  the  parties  being  ambiguous,  the  payee  or 
holder  may  treat  the  instrument  either  as  a  note  or  as  an 
accepted  bill.^  And  where  a  paper  is  executed,  in  the  form 
of  a  promissory  note,  promising  to  pay  the  payee,  after 
the  maker's  death,  a  sum  of  money  in  satisfaction  of 
money  advanced  or  services  rendered,  either  to  maker  or 
a  third  person,  it  is  a  promissory  note  and  not  a  testa- 
mentary disposition. 2 

1  Edis  V.  Bury,  6  Barn  &  Cres.  433. 

2  Hegeman  v.  Moon,  131  N.  Y.  462;  30  N.  E.  487;  Wolfe  v.  Wilsey,  2 
Ind.  App.  549. 

9 


CHAPTER    II. 

THE  REQUISITES   AND   COMPONENT  PARTS   OF  BILLS  AND 

NOTES. 

Section  7.  The  date. 

8.  Ante-dating  and  post-dating. 

9.  Name  of  drawer  or  maker. 

10.  Joint  and  several  notes. 

11.  Two  or  more  drawers. 

12.  Liability  of  one  or  more  joint  makers  or  drawers,  as 

sureties. 

13.  The  name  of  the  drawee. 

14.  The  name  of  the  payee. 

15.  Fictitious  or  non-existing  parties. 

16.  Same  person  as  different  parties. 

17.  Words  of  negotiability. 

18.  A  distinct  obligation  to  pay. 

19.  Time  of  payment. 

20.  Payment  must  be  unconditional. 

21.  Certainty  as  to  amount  of  payment. 

22.  Payment  in  money  only. 

23.  The  place  of  payment. 

24.  Acknowledgment  of  consideration. 

25.  Sealed  instruments  not  negotiable. 

26.  Delivery. 

27.  Delivery  as  an  escrow. 

28.  Delivery  of  bills  and  notes  executed  in  blank. 

§  7.  The  date. —  It  is  customary  for  a  bill  or  note  to  be 
dated ;  and  where  such  bill  or  note  is  made  at  a  certain  time 
after  date,  it  would  seem  to  be  essential  that  the  date  be 
given  on  the  paper.  But  it  is  very  generally  held,  that  in 
no  case  is  the  statement  of  the  date  in  the  bill  or  note 
absolutely  necessary  to  its  validity  or  negotiability. 
Where  the  date  is  not  given,  it  is  the  day  of  the  issue;  and 
this  may  be  shown  by  parol  evidence,  and  the  day  of  maturity 
be  computed  from  the  proven  day  of  issue.  If  the  day  of 
delivery  cannot  be  proven,  the  maturity  may  be  computed 
from  the  earliest  day  on  which  the  bill  or  note  is  proven  to 
have  been  in  the  possession  of  the  payee  or  subsequent 
10 


CH.  II.]  PARTS    OF   BILLS   AND    NOTES.  §    8 

holder.^  Where  a  note  or  bill  is  negotiated  without  date,  the 
payee  or  holder  is  impliedlj'  authorized  to  insert  the  real 
date;  and  while,  as  between  the  maker  and  himself,  he 
cannot  insert  any  other  but  the  real  date  or  day  of  delivery ; 
if  he  does  put  in  a  different  date,  whether  it  accelerates  or 
postpones  the  time  of  payment,  it  will  bind  the  maker, 
after  it  has  passed  into  the  hands  of  a  bona  Jlde  holder.^ 
Any  mistake  in  the  date  may  be  proven  by  parol  evi- 
dence, as  against  every  one  but  a  bona  fide  holder  ;  and  it 
may  be  corrected  in  an  equitable  action  for  the  reformation 
of  the  instrument.^  The  date  is  usually  written  in  the  upper 
right-hand  corner  of  the  bill  or  note  ;  but  it  will  be  good  if 
it  appears  anywhere  else.* 

§  8.  Ante-dating  and  post-dating. —  It  is  not  uncommon 
for  a  bill  or  note  to  be  ante-dated  or  post-dated,  in  order  to 
accelerate  or  postpone  the  time  of  payment.  And  in  such 
a  case  the  time  of  payment  is  always  to  be  computed  from 
the  stated  date.  Such  a  practice  does  not  invalidate  the 
instrument;  nor  is  there  any  ground  for  suspicion  if  the 
instrument  has  been  negotiated  before  the  given  date.^ 
The  validity  of  a  bill  or  note  is  determined  by  the  actual 
day  of  delivery  or  negotiation,  and  not  by  the  given  date. 
So,  where,  through  the  act  of  ante-dating  or  post-dating, 

1  Clark  V.  Sigourney,  17  Conn.  511;  Hill  v.  Dunham,  7  Gray,  543  {27 
Am.  Kep.  70);  Cowing  v.  Altraan,  71  N.  Y.  435;  Collins  Z7.  Driscoll,  69 
Cal.  550  (11  P.  244);  Seldonridge  v.  Connable,  32  Ind.  375;  Dean  v.  De 
Lezardi,  24  Miss.  424;  King  v.  Fleming,  72  111.  21  (22  Am.  Rep.  131). 

2  Androscoggin  Bank  v.  Kimball,  10  Gush.  373;  Goodman  v.  Simonds, 
19  Mo.  106;  Page  v.  Morrell,  3  Keyes,  417;  3  Abb.  App.  Dec.  433;  33 
IIow.  Pr.  244;  Michigan  Bank  v.  Eldred,  9  Wall.  544;  Maxwell  v.  Van 
Sant,  46  111.  58. 

3  Huston  V.  Young,  33  Me.  85;  Cranson  v.  Goss,  107  Mass.  439;  9  Am. 
Rep.  45;  Paysant  v.  Ware,  1  Ala.  100;  Almich  v.  Downey,  45  Minn.  460 
(48  N.  W.  574) ;  Germania  Bank  v.  Distler,  4  Hun,  633;  Buck  v.  Steffey,  65 
Ind.  58;  Knox  v.  Clifford,  38  Wis.  651  (20  Am.  Rep.  28);  Greathead  v. 
Walton,  40  Conn.  226. 

•*  Sheppard  v.  Graves,  14  IIow.  505. 

6  McSparran  v.  Neely,  91  Pa.  St.  17;  Luce  v.  Shoff,  70  Ind.  152; 
Burn  V.  Kahn,  47  Mo.  App.  215;  Collins  v.  Driscoll,  69  Cal.  550  (11  P. 
244);  Frazier  v.  Trow  Printing  Co.,  24  Hun,  281  (checks). 

11 


§   9  PARTS    OF    BILLS    AND    NOTES.  [CII.  II. 

the  instrument  is  made  to  appear  to  have  been  negotiated 
at  a  time  when  the  parties  were  unable,  throui^h  death, 
infancy  or  insanity,  or  through  the  prohibition  of  the  law 
to  make  contracts  on  that  day  (Sunday  laws),  to  execute 
a  valid  obligation ;  it  may  be  shown  by  parol  evidence, 
when  the  instrument  was  actually  delivered  or  negotiated. 
On  the  other  hand,  if  this  practice  is  resorted  to,  in  order 
to  make  a  bill  or  note  appear  to  be  valid,  by  concealing 
the  actual  day  of  delivery,  parol  evidence  is  equally  admis- 
sible to  show  the  actual  day  of  delivery  and  the  consequent 
invalidity  of  the  instrument.^ 

§  ^.  N'aine  of  drawer  or  maker. — Inasmuch  as  a  bill  or 
note,  to  be  negotiable,  requires  that  every  essential  element 
to  the  obligation  must  be  definitely  stated  in  the  instru- 
ment ;  not  only  must  the  name  of  the  drawer  of  a  bill,  or  of 
the  maker  of  a  note,  appear  in  the  instrument,  but  it  must 
so  appear  as  to  cause  no  uncertainty  as  t»  who  is  the  drawer 
or  maker.  For  this  reason,  it  is  held  that  the  negotiability 
of  an  instrument  is  destroyed  where  it  is  signed  by  two  per- 
sons in  the  alternative. ^  It  is,  however,  a  question  of  con- 
siderable doubt,  whether  the  absence  of  the  drawer's 
signature  from  a  bill  is  cured  by  the  acceptance  of  the 
drawee.  The  better  opinion  is  that  the  acceptance  does  not 
give  validity  to  the  bill,  as  long  as  the  drawer's  signature  is 
not  added. ^  It  must  be  remembered,  however,  that,  where 
a  bill  or  note  is  negotiated  without  the  signature  of  a  neces- 
sary  party,  the  payee  or  holder  has  the  implied  authority 

1  Bayley  v.  Taber,  5  Mass.  286;  Aldridge  v.  Branch  Bank,  17  Ala.  45; 
Cranson  v.  Goss,  107  Mass.  439  (9  Am.  Rep.  45) ;  King  v.  Fleming,  72  111. 
21  C22  Am.  Rep.  131). 

2  Ferris  v.  Bond,  4  Barn.  &  Aid.  679.  In  this  case,  the  note  read: 
"  I,  J.  C,  promise,  etc  ,"  and  was  signed,  "  J.  C.  or  H.  B."  If  the  "  or  " 
had  been  omitted,  this  would  have  been  a  joint  and  several  note,  H.  B. 
signing  In  the  character  of  a  surety. 

3  Tevis  V.  Young,  1  Met.  (Ky.)  197.  Suit  was  brought  on  the  accept- 
ance by  the  holder  of  an  unsigned  bill,  and  it  was  held  that  the  suit 
■would  not  lie.  The  same  conclusion  was  reached  by  the  English  and 
other  American  courts  in  McCall  v.  Taylor,  19  C.  B.  (n.  s.)  301 ;  May  v. 
Miller,  27  Ala.  515;  Knight  v.  Hurlbert,  74  111.  133. 

12 


CH.   II.]  PARTS    OF    BILLS    AND    NOTES.  §  9 

to  add  the  needed  signature. ^  While  it  is  customary  and 
advisable  for  the  name  of  the  drawer  or  maker  to  be 
written  in  full,  this  is  not  necessary  to  the  validity  of  the 
bill  or  note.  The  signature  may  be  made  in  any  way, 
which  would  enable  the  drawer  or  maker  to  be  identified ; 
and  as  long  as  identification  is  possible,  any  signature  of 
the  bill  or  note  will  be  a  suflicient  proof  of  the  intention  to 
execute  it.  Initials  would  answer,^  and  an  assumed  or 
fictitious  name  will  suffice,  provided  the  real  party  can  be 
identified.^  It  is  not  even  necessary  for  the  names,  real  or 
assumed,  of  the  parties  to  be  written  in  the  paper.  Other 
means  of  description  may  be  used  in  the  execution.  A 
note  or  bill  would,  doubtless,  be  valid  and  binding  if  signed 
*«  The  heirs  of  A.  B.,"  and  it  has  been  held  that  a  note  signed 
*'  Steamboat  Ben  Lee  and  owners  "  was  properly  executed.* 
Where  the  signature  takes  the  form  of  a  mark,  proof  of  the 
intention  to  make  the  mark  as  a  signature  must  be  made ;  but 
attestation  of  the  mark  by  witnesses  is  not  necessary  to  its 
validity.^  The  signature,  as  well  as  the  body  of  the  instru- 
ment, may  be  written  in  ink  or  pencil,  and  be  equally  valid. ° 
So,   also,   may  the  signature   be   affixed  by   means    of  a 

»  Harvey  v.  Cane,  34  L.  T.  R.  64;  Moiese  v.  Knapp,  30  Ga.  942;  Tevis 
V.  Youug,  1  Met.  (Ky.)  197;  Whitmore  v.  Nickerson,  125  Mass.  496  (28 
Am.  Rep.  257). 

2  Merchants'  Bank  v.  Spicer,  6  Wend.  443;  Weston  v.  Myers,  33  111. 
424;  Bank  of  Lassen  Co.  v.  Sherer,  108  Cal.513  (41  P.  415),  misspelling  of 
the  Christian  name. 

3  Stony  Island  Hotel  Co.  v.  Johnson,  57  111.  App.  608;  Melledge  v. 
Boston  Iron  Co.,  5  Cush.  158  (51  Am.  Dec.  59);  Bartlett  v.  Tucker,  104 
Mass.  336  (6  Am,  Rep.  240).  The  use  by  a.  genuine  party  of  an  assumed 
name  must  not  be  confounded  with  the  addition  to  the  paper  of  the  name 
of  &  fictitious  party.     As  to  which  see  post,  §  15. 

*  Sanders  v.  Anderson,  21  Mo.  402.  See  to  same  effect  May  v.  Hewett, 
33  Ala.  161. 

'i  Willoughby  v.  Moulton,  47  N.  II.  205;  Brown  u.  Butchers'  Bank,  G 
Hill,  443  (41  Am.  Dec.  755);  Chadwell's  Adm'r  v.  Chadwell,  98  Ky.  643 
(33  S.  W.  1118);  Handyside  v.  Cameron,  21  111.  588  (74  Am.  Dec.  119); 
Flowers  v.  Bitting,  45  Ala.  448  (by  statute  the  name  of  the  maker  or 
drawer  is  required  to  be  written  alongside  of  the  mark,  in  order  to 
be  valid). 

6  Brown  v.  Butchers'  Bank,  6  Hill,  443  (41  Am.  Dec.  755);  Reed  v. 
Roark,  14  Tex.  329  (65  Am.  Dec.  127). 

13 


§   10  PARTS    OF   BILLS    AND   NOTES.  [CH.    II 

stamp. ^  A  printed  signature  is  also  sufficient,  provided 
the  printed  signature  can  be  shown  to  have  been  adopted 
by  the  maker  or  drawer  as  his  signature  in  execution  of  the 
bill  or  note.2 

The  signature  of  the  drawer  or  maker  is  customarily 
subscribed,  i.  e.,  written  at  the  end  of  the  bill  or  note,  in 
the  right-hand  corner.  But  the  location  of  the  signature 
is  a  matter  of  no  importance,  except  that,  where  it  does 
not  appear  in  its  customary  place,  the  burden  is  on  the 
holder  to  show  that  the  signature,  appearing  elsewhere,  was 
written  with  the  intention  of  executing  the  bill  or  note. 
Where  that  intention  is  proven,  a  note  is  properly  signed, 
where  it  reads,  *' I,  A.  B.,  promise  to  pay,"  etc.^  Of 
course,  if  the  statute  of  a  State  in  reference  to  bills  and 
notes,  requires  subscription  as  necessary  to  their  validity, 
the  signature  must  be  placed  at  the  bottom. 

§  10.  Joint  and  several  notes. —  A  note  may  be  signed 
by  two  or  more  makers,  and  the  character  of  their  liabilit}' 
will  be  determined  according  as  the  note  is  held  to  be  a 
joint  note,  or  a  joint  and  several  note.  If  it  is  a  joint  note, 
and  the  common  law  has  not  been  changed  by  statute,  all 
the  makers  must  be  sued  together.  They  cannot  be  sued 
separately.  If  it  is  a  joint  or  several  note,  the  holder  may 
sue  all  together,  or  he  may  bring  separate  actions  against 
each  one  of  the  makers.  But  he  cannot  sue  in  the  same 
action  more  than  one  and  less  than  all.  He  must  sue  all  or 
only  one  of  them.  Modern  statutory  procedure  now  gen- 
erally, throughout  the  United  States,  authorizes  the  main- 
tenance of  an  action  against  any  number  of  joint  obligors, 
more  than  one  and  less  than  all,  whatever  may  have  been 
the  character  of  the  obligation  at  the  common  law.     The 

1  Bennett  v.  Brumfitt,  L.  E.  3  C.  P.  28. 

2  Brown  v.  Butchers'  Bank,  6  Hill,  443  (41  Am.  Dec.  755) ;  Schneider 
V.  Norris,  2  M.  &  S.  286;  Pennington  v.  Baehr,  48  Cal.  565;  Weston  v. 
Myers,  33  111.  424. 

3  Clason  V.  Bailey,  14  Johns.  484;  Saunderson  v.  Jackson,  2  Bos.  &  P. 
238;  Schmidt  v.  Schmaelter,  45  Mo.  502;  Palmer  v.  Grant,  4  Conn.  389; 
Rodocanachi  v.  Butterick,  125  Mass.  134;  Nat.  Pemberton  Bk.  z).  Longee, 
108  Mass.  371  (11  Am.  Rep.  367). 

14 


CI[.   II.]  PARTS    OF    BILLS    AND    NOTES.  §    12 

tlislinctioD  between  ^0271^  notes  and  joint  and  several  noieSi 
has  been  practically  abolished  everywhere.^ 

§  11.  Two  or  more  drawers. —  A  bill  may  be  executed 
by  two  or  more  drawers,  whether  they  sign  individually  or 
as  partners.  Where  they  sign  as  partners,  there  is  in 
reality  but  one  drawer,  the  partnership. ^  But  where  they 
sign  individually,  they  are  joint  and  several  obligors,  each 
being  individually  liable  in  solido  to  the  holder  and  to  the 
drawee,  if  the  hitter  accepts  the  bill.^ 

§  12.  Liability  of  one  or  more  joint  makers  or  draw- 
ers as  sureties. —  As  is  more  fully  explained  in  a  subse- 
quent chapter,^  a  surety  is  one  who  guarantees  the  due 
performance  of  an  obligation,  by  becoming  a  regular  party 
to  a  bill  or  note.  Where  nothing  appears  on  the  bill  or  note 
to  show  that  one  of  the  makers  or  drawers  has  signed  as 
surety,  such  co-maker  or  co-drawer  sustains,  as  to  all  subse- 
quent bona  fide  holders,  the  same  liability  as  does  the  princi- 
pal debtor.  But  if  he  writes  the  word  "  surety  "  at  the  end 
of  the  name,  he  gives  notice  to  all  subsequent  holders,  that 
he  is  a  surety ;  and  if  there  is  any  defense  available,  grow- 
ing out  of  his  character  as  a  surety,  it  will  prevail  against 
such  holder.  But  in  the  absence  of  any  such  defense,  he 
is  liable  to  the  holder ;  and,  in  the  case  of  a  bill,  to  the  ac- 
ceptor, to  the  same  extent  as  the  principal  debtor.''  But, 
as  between  themselves,  in  determining  their  mutual  rights, 
and  particularly  in  ascertaining  their  right  of  contribution 
from  each  other  ;  where  one  of  them  has  paid  the  note  or 
bill  in  full,  it  is  always  permissible  to  show  that  one  of 
them  had  signed  as  a  surety.*^ 

^  For  cases  illustrating  this  distinction,  see  Tiedeman  on  Commercial 
Paper,  §  13,  and  works  on  Contracts  generally. 

2  See  posf,  Chapter  IV.,  on  I'artners. 

3  Suydam  v.  Westfall,  4  Hill,  211;  2  Denio,  205. 
■*  See  post,  chapter  on  Sureties  and  Guarantors. 

6  Suydam  V.  Westfal),  4  Hill,  211;  2Deuio,205;  Benedict  v.  Cox,  52 
Vt.  247;  Spriggv.  Bank  of  Mount  Pleasaut,  10  Pet.  2(]4;  Summerhill  v. 
Tapp,  52  Ala.  227;  Jackson  v.  Wood,  108  Ala.  312  (11)  So.  312). 

G  Hubbard  v.  Gurney,  64  N.  Y.  457;  Holt  v.  Bodey,  18  Pa.  St.  214; 
McGee  v.  Prouty,  9  Met.  547  (43  Am.  Dec.  409). 

15 


§   13  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

§  13.  The  name  of  the  drawee. —  A  bill  is  incomplete, 
if  the  name  and  address  of  the  drawee  are  not  given  in 
the  instrument,  and  it  is  customary  for  them  to  be  written 
in  the  left-hand  corner  of  the  face  of  the  bill  at  the  bottom. 
But  the  place  is  not  at  all  essential,  provided  it  can  be 
ascertained  on  whom  the  bill  was  drawn.  It  has  been 
held  that  the  name  of  the  drawee  need  not  be  inserted  in  the 
bill,  provided  that  he  could  be  ascertained  from  the  address 
given  in  the  bill,  where  the  bill  was  payable. ^  The  drawee 
may  also  be  described  by  his  business  relations,  instead  of 
bv  name  ;  and  it  will  be  a  sufficient  address,  if  he  can 
thereby  be  identified.^ 

If  the  bill  does  not  indicate  in  any  of  these  ways  on 
whom  it  is  drawn,  and  to  whom  presentment  for  accept- 
ance and  for  payment  is  to  be  made,  the  bill  is  not  valid. 
If,  however,  such  a  bill  is  actually  accepted  by  some  one, 
he  is  estopped  from  denying  that  he  was  the  drawee.^  It 
has  been  held  in  Illinois  that  an  instrument  in  the  form  of 
a  bill,  without  any  designation  of  a  drawer,  is  to  be  treated, 
either  as  the  promissory  note  of  the  drawee,  or  a  bill  of 
exchange  drawn  on  himself.* 

There  may  be  two  or  more  drawees,  and  each  must 
accept  individually  in  order  to  be  bound,  if  they  are  not 
partners.  It  is,  however,  not  necessary  for  all  of  them  to 
accept.  The  acceptance  of  one,  or  any  number  less  than 
all  of  the  drawees,  will  bind  those  who  accept,  and  the  bill 
may  be  negotiated  without  the  acceptance  of  the  others.^ 
Sometimes,  too,  a  bill  is  drawn  on  two  drawees,  in  the 
alternative,  as,  for  example:  "  to  A.,  or  in  case  of  need, 
to  B."     In  such  a  case,  the  acceptance  by  the  first  pre- 

1  Gray  v.  Milner,  8  Taunt.  739.  In  this  case  the  bill  read  "  payable 
at  No.  1  Wilmot  street,  opposite  the  Lamb,  Bethnal  Green,  London." 
See  also  Cork  v.  Bacon,  45  Wis.  192  (30  Am.  Rep.  712). 

2  As  where  the  bill  was  drawn  on  "  The  Steamer  Dorrance  and 
owners.    Ala.  Coal  &  Mining  Co.  v.  Brainard,  35  Ala.  476. 

3  Wheeler  v.  Webster,  1  E.  D.  Smith,  1;  Walton  u.  Williams,  44  Ala. 
347;  Watrous  v.  Holbrook,  39  Tex.  572. 

*  Funk  V.  Babbitt,  156  111.  408;  41  N.  E.  166. 

*  Mountstephen  v.  Brooke,  1  Barn.  &  Aid.  224.  But  see  563. 

16 


CH.   II.]  PARTS    OF    BILLS    AND    NOTES.  §    14 

eludes  aceeptance  by  the  other.  But  before  there  can  be 
protest  for  non-acceptance,  the  bill  must  be  presented  to 
both  or  all,  if  there  be  more  than  two  drawees.*  Inasmuch 
as  the  drawee  does  not  assume  any  liability  on  a  bill,  until 
he  accepts,  this  address  of  the  bill  to  two  persons  in  the 
alternative  does  not  in  any  way  violate  the  rule  of  negotia- 
ble paper,  requiring  certainty  as  to  the  parties  to  the  bill. 
The  acceptance  by  one  of  these  drawees  supplies  the 
required  certainty  of  parties. 

§  14.  Name  of  the  payee. —  In  order  that  a  negotiable 
bill  or  note  may  be  valid,  the  payee  must  be  defined  in  the 
instrument  with  reasonable  certainty.  If  the  instrument 
does  not,  even  in  the  most  general  terms,  indicate  a  payee, 
although  the  real  party  in  interest  can  maintain  suit  against 
the  maker  or  drawer  on  the  original  consideration,  the 
holder  of  the  bill  or  note  cannot  sue  on  the  instrument,  at 
least  as  a  negotiable  bill  or  note.^  It  is  not,  however, 
necessary  for  the  payee  to  be  described  by  name.  A  bill 
or  note,  payable  to  bearer^  is  generally  held  to  be  negotia- 
ble, without  any  other  description  of  the  particular  payee, 
the  holder  of  the  paper  being  held  in  every  such  case  to  be 
the  presumptive  payee.''  So,  also,  may  a  note  or  bill  be 
made  payable  to  the  "  Heirs  of  A."  ^ 

The  payee's  name  may  appear  in  the  acknowledgment  of 
the  receipt  of  the  consideration,  as  where  the  paper  reads: 
"  Received  of  John  Doe  one  hundred  dollars,  which  I 
promise  to  pay  on  demand."  ^ 

1  Anon.,  12  Mod.  447;  Tiederaan  Com.  Paper,  §  16;  post,  §  r,3. 

2  Prewitt  u.  Chapman,  6  Ala.  80;  Hoyt  v.  Lynch,  2  Sandf.  328; 
Bacon  v.  Fitch,  1  Root,  181 ;  Adams  v.  King,  IG  111.  109  (61  Am.  Dec.  64). 
Thus  a  note  was  held  to  be  good,  but  non-negotiable,  where  "  you  "  was 
the  only  designation  of  the  payee,  the  real  payee  being  shown  by  parol  evi- 
dence.    Kinney  v.  Flynn,  2  R.  I.  329;  Shackleford  y.  Hooker,  54  Miss.  716. 

^  Rich  V.  Starbuck,  51  Ind.  87;  Hathcock  v.  Owen,  44  Miss.  799; 
United  States  v.  White,  2  Hill,  59  (37  Am.  Dec.  374). 

*  Bacon  v.  Fitch,  1  Root,  181 ;  Cox  v.  Beltzhoover,  11  Mo.  142  (47  Am. 
Dec.  145)-. 

«  Green  v.  Davies,  4  B.  &  C.  235;  Maze  v.  Heinze,  53  111.  App.  503; 
Cumraings  v.  Gassett,  19  Vt.  308. 

2  17 


§   15  PARTS   OF   BILLS    AND    NOTES.  [CH.  II. 

A  bill  or  note  may  be  made  payable  to  two  payees  in 
the  alternative,  and  it  may  be  sued  on,  at  least  in  a  joint 
action  by  the  payees;  but  such  a  provision  would  destroy 
the  negotiability  of  the  instrument.^  And  this  rule  has 
been  carried  to  the  extreme  of  holding  that  a  note,  payable 
"  to  Olive  Fletcher  or  E..  H.  Oakes,  administrators  of 
Winslow  Fletcher,  deceased"  was  not  negotiable,  although 
the  law  authorizes  one  of  two  or  more  personal  representa- 
tives to  receive  payment  of  a  note  payable  to  the  decedent's 
estate.^ 

Where  a  note  or  bill  is  made  payable  to  two  or  more 
payees,  all  must  join  in  the  indorsement,  in  order  to  make 
an  effective  transfer.  But  payment  may  be  made  to  either 
for  the  benefit  of  all.^  Their  interests  are  presumed  to  be 
co-equal.^ 

Where  the  payee's  name  is  left  out,  and  a  blank  space 
for  the  insertion  of  his  name  is  unfilled,  the  holder  is 
impliedly  authorized  to  insert  the  name.^ 

§  15.  Fictitious  or  non-existing  parties.  — It  is  not  an 

uncommon  practice,  in  order  to  give  a  bill  or  note  a  ficti- 
tious value,  for  fictitious  persons  to  be  named  as  payees 
and  indorsees,  and  for  the  real  payee  to  make  indorsements 
for  these  fictitious  parties.  The  English  rule  was,  that 
where  the  introduction  of  fictitious  parties  is  done  with  the 
knowledge  of  the  maker  of  the  note  or  the  acceptor  of  a 
bill,  he  can  be  held  liable  on  such  an  instrument  in  an 
action  by  a  bona  fide  holder,  as  if  it  were  payable  to 
bearer;  but  that  he  is  not  liable,  if  he  was  ignorant  of  the 
use  of  fictitious  parties.^     And  this  distinction,  based  upon 

J  Parker  v.  Carson,  64  N.  C.  563;  Blanckenhagen  w.  Blundell,  2  B.  & 
Aid.  417;  Walrad  v.  Petrie,  4  Wend.  576;  Spaulding  v.  Evans,  2  McLean, 
139;  Carpenter  v.  Farnsworth,  106  Mass.  561  (8  Am.  Rep.  360). 

2  Musselman  v.  Oakes,  19  111.  81  (68  Am.  Dec.  583);  Carr  v.  Bauer, 
61  111.  App.  504. 

3  Ryhiner  u.  Feickert,  92  111.  305  (34  Am.  Rep.  130). 
•»  Tisdale  v.  Maxwell,  58  Ala.  40. 

5  First  Nat.  Bank  v.  Johnson,  97  Ala  655  (11  So.  690). 

6  Tatlock  V.  Harris,  3  T.  R.  174;  CoUis  v.  Emmett,  1  H.  Bl.  313. 

18 


CH.   II.]  PARTS    OF   BILLS    AND    NOTES.  §    16 

the  ignorance  or  knowledge  of  the  primary  obligor  of  the 
fictitious  character  of  the  payee  or  indorsee,  has  been  fol- 
lowed by  many  of  the  courts  in  this  country,  particuhirly 
in  the  case  of  a  bank,  on  which  a  check  is  drawn  payable 
to  a  fictitious  payee. ^  In  Enghind,  by  the  act  of  1882,  the 
acceptor  of  a  bill  or  maker  of  a  note,  made  payable,  or 
indorsed  to  fictitious  parlies,  is  liable  thereon  as  if  it  were 
originally  made  payable  to  bearer,  whether  he  knew  of  the 
fictitious  character  of  the  parties  or  not.^  But  the  right  to 
treat  the  paper  as  payable  to  bearer  is  limited  to  bona  fide 
holders.  One,  who  takes  the  paper  with  knowledge  of  the 
fictitious  character  of  some  of  the  parties,  cannot  maintain 
an  action  against  the  maker  or  acceptor  in  any  case.^ 

§  16.  Same  person  as  different  parties. —  In  order  that 
commercial  paper  may  be  negotiated  without  indorsement 
and  the  consequent  liability  of  indorsers,  and  yet  avoid 
the  commercial  discredit  of  an  indorsement  "  without 
recourse;"  it  has  become  quite  common  for  bills  and  notes 
to  be  made  payable  to  the  order  of  the  drawer  or  maker, 
so  that  the  named  payee  is  the  same  person  as  the  drawer 
or  maker.  The  drawer  or  maker  then  indorses  it  in  blank, 
and  it  is  then  transferred,  as  if  it  had  been  made  payable 
to  bearer.  Of  course,  two  parties,  distinct  and  separate, 
are  as  necessary  to  the  negotiation  of  a  bill  or  note,  as  they 
are  to  the  making  of  any  other  contract.  For  this  reason, 
it  was  once  held  that  a  bill  or  note,  in  which  the  drawer  or 

'  Armstrong  v.  Pomeroy  Nat.  Bank,  46  Ohio  St.  512  (22  N.  E.  866); 
Cham  V.  First  Nat.  Bank  of  N.  Y.,  96  Tonn.  G41;  36  S.  W.  387;  Farns- 
worth  V.  Drake,  11  Ind.  101;  Shipman  v.  Bank  of  the  State  of  New 
York,  126  N.  Y.  318  (27  N.  E.  371)  (latter  case  rests  upon  provision  of 
the  N.  Y.  Rev.  Statutes).  For  a  fuller  discussion,  see  Tiedeman  Com. 
Paper,  §  19. 

2  Glutton  V.  Attenborough,  2  Q.  B.  707;  Vagliano  v.  Bank  of  England, 
L.  R.  16  A  pp.  Cas.  107.  See  also  to  that  eti'ect,  Lane  v.  Krekle,  22  Iowa, 
399;  Ort  V.  Fowler,  31  Kan.  478  (47  Am.  Rep.  501). 

•''  Hunter  v.  Jeffery,  Peake  Add.  Cas.  146.  It  would  seem,  however, 
that  such  a  hi)lder,  if  he  were  not  actually  guilty  of  participation  in  a 
fraud,  could  recover  the  consideration  in  an  action  for  money  had  and 
received.     Foster  v.  Shattuck,2  N.  II.  446. 

19 


§    17  PARTS    OF    UILI.S    AND    NOTES.  [CII.  II. 

maker  vvjis  the  named  puyee,  was  invalid. ^  But  the  pre- 
vailing rule  is,  that  while  it  is  an  impossibility  for  a  valid 
bill  or  note  to  be  created  in  that  manner,  as  long  as  it  is 
not  transferred  to  some  other  person,  because  there  has 
been  no  delivery,  and  consequently  not  a  complete  con- 
tiact;  as  soon  as  it  has  been  indorsed  and  transferred  to 
a  purchaser,  there  are  two  distinct  separate  parties  in  con- 
tractual relation  to  each  other,  and  the  paper  may  be  sued 
on,  as  if  originally  payable  to  bearer.^ 

The  drawer  may  draw  upon  himself,  and  likewise  make 
the  bill  payable  to  his  own  order,  so  that,  when  indorsed 
by  him  in  blank,  and  delivered  to  another  person,  a  good 
negotiable  instrument  will  have  been  executed.  Inasmuch, 
however,  as  the  drawer  and  drawee  are  the  same  persons, 
the  holder  may  at  his  option  treat  the  paper  as  a  bill  of  ex- 
change or  promissory  note,  and  in  neither  case  is  present- 
ment for  acceptance  necessary.'^ 

§  17.  Words  of  negotiability. —  When  bills  of  exchange 
first  came  into  use,  chases  in  action  were  in  general  non- 
assignable at  the  common  law;  and  in  order  that  the  inten- 
tion of  the  parties,  to  make  the  bill  assignable  and  negoti- 
able, may  be  shown,  it  became  the  custom  to  make  it  in 
express  terms  payable  to  the  payee  or  order,  or  bearer. 
So,  also,  when  promissory  notes  were  by  the  Statute  of 
Anne  declared  to  be  negotiable  like  bills  of  exchange,  the 
notes  which  would  fall  within  the  statute  were  described  as 
containing  these  or  similar  words  of  negotiability.  It  has 
in  consequence  become  the  universal  opinion  that,  without 
these  words  of  negotiability,  a  bill  or  note,  or  any  other 

1  Flight  V.  MacLean,  16  M.  &  W".  51, 

2  Lovejoy  v.  Spafford,  93  U.  S.  430;  Roby  v.  Phelon,  118  Mass.  541; 
C  )ra.  V.  Dallinger,  118  Mass.  439;  Irving  Banli  w.  Alley, 79  N.  Y.  636; 
Mainu.  Hilton,  54  Cal.  110;  Picliering  v.  Cording,  92  Ind.  306  (47  Am. 
Rep.  145);  Miller  v.  Weeks,  22  Pa.  St.  89;  Kayser  u.  Hall,  85  111.  51  (28 
Am.  Rep.  628).  This  is  now  the  generally  accepted  doctrine  everywhere 
in  this  country  and  in  England.  For  fuller  citations  of  authorities  see 
Tiedeman  Com.  Paper,  §  20. 

3  Lovejoy  v.  Spafford,  93  U.  S.  430;  Planters'  Bank  v.  Evans,  36  Tex. 
592;  Cunningham  v.  Wardwell,  12  Me.  466.  . 

20 


CII.   II.]  PARTS    OF    BILLS    AND    NOTES.  §   17 

species  of  commercial  paper,  will  not  be  negotiable,  and 
the  holder  takes  the  instrument  subject  to  all  the  defenses, 
which  might  be  set  up  against  the  original  payee. ^  While 
the  original  purpose  of  these  words  was  to  show  the 
maker's  or  drawer's  consent  to  the  transfer  of  the  paper 
to  others,  so  as  to  pass  legal  title,  they  now  survive  the 
repeal  of  the  common  law  prohibition  of  the  assignment  of 
choses  in  action,  as  evidence  of  an  intention  to  give  to  the 
paper  the  characteristics  of  negotiability.  The  paper  is 
assignable  without  these  words,  but  the  assignee  does  not 
have  the  protection  of  bona  fide  ownership  against  defenses 
to  the  paper,  which  do  not  appear  on  its  face.^ 

While  the  words,  or  order,  or  bearer,  are  generally  em- 
ployed, neither  is  necessary;  any  words  will  be  sufficient, 
which  indicate  the  obligor's  consent  to  the  transfer  of  the 
paper.  Thus  ''holder"  and  "assigns"  are  good  equiva- 
lents, and  the  use  of  them  will  make  the  bill  or  note  nego- 
tiable.^ 

It  seems,  however,  that,  where  the  paper  contains  an  ex- 
press declaration  that  it  is  negotiable,  the  use  of  any  of 
these  words  of  negotiability  may  be  dispensed  with,  with- 
out destroying  the  negotiability  of  the  paper.*  Where 
a  bill  or  note  is  made  payable  to  the  order  of  A.,  it  has 
the   same    effect  as   when    it    reads  "to  A.  or  order."  ^ 

1  Words  of  negotiability  not  necessary  in  some  of  the  States.  Searles 
V.  Seipp,  6  S.  D.  472  (61  N.  W.  804);  Haines  v.  Nance,  52  111.  App.  406 
CRev.  Stat.  111.,  oh.  98,  §  3) ;  National  Bank  v.  Leonard,  91  Ga.  805  (18  S. 
E. 32). 

2  Bank  of  Sherman  y.  Apperson,  4  Fed.  Rep.  25;  United  States  v. 
White,  2  Hill,  59  (37  Am.  Dec.  374);  Sibley  v.  Phelps,  G  Cu.sh,  172;  War- 
ren V.  Scott,  32  Iowa,  22;  Sinclair  v.  Johnson,  85  Ind.  527.  See  Tiedeman 
Com.  Paper,  §  21,  for  a  fuller  statement. 

3  Putnam  v.  Cryraes,  1  McMull.  9  (36  Am.  Dec.  250) ;  Wilson  Co.  v. 
National   Bank,  103  U.  S.   770;  Dutchess  Co.    Ins.  Co.  v.   Hachfield,  1 

Hun,  675  (coupon  bond  to  " ,  his  executors,  administrators  andns- 

signs).   But  see,  contra,  as  to  "  collector,"  Noxon  v.  Smith,  127  Mass.  485. 

4  Raymond  v.  Middleton,  29  Pa.  St.  529,  530;  and  see  Cudahy  Packing 
Co.  V.  Sioux  Nat.  Bank,  75  Fed.  473;  21  C.  C.  A.  428. 

fi  Smith  V.  McClure,  5  East,  476;  Wittey  v.  Mich.  Mut.  L.  I.  Co.,  123 
Ind.  411  (24  N.  E.  141);  Howard  v.  Palmer,  04  Me.  86;  Stevens  v.  Gregg, 
89  Ky.  401  (12  S.  W.  775);   Iluling  v.  Hugg,  1  Watts  &  S.  419. 

21 


§   18  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

And  where  a  note  is  made  payable  to  bearer,  it  is  not 
necessary  to  its  negotiability  to  name  any  particular  person 
as  payee. ^  But  it  is  not  negotiable,  if  it  is  made  payable 
to  the  bearer  A.^  as  the  word  bearer  in  that  connection 
only  describes  A.  and  is  not  intended  as  a  word  of  nego- 
tiability.2 

§  18.  A  distinct  obligation  to  pay. —  In  order  lo  make 
a  bill  or  note  negotiable,  it  must  contain  a  distinct  obliga- 
tion to  pay;  the  bill  must  contain  a  certain  order  or  com- 
mand to  the  drawee  to  pay,  while  the  note  must  contain  a 
certain  promise  to  pay.  If,  however,  the  instrument  shows 
the  intention  to  pay  a  certain  sum  of  money,  it  will  be  a 
good  promissory  note,  although  there  may  not  be  a  dis- 
tinct promise  to  pay.^  And  the  omission  of  the  personal 
pronoun,  *'I'*or  «'we"  will  not  affect  the  negotiability 
of  an  otherwise  properly  executed  note.*  Where,  in  a  bill, 
in  accordance  with  the  custom  of  commercial  courtesy,  the 
phrase  used  is  "please  pay,"  it  is  no  less  a  command  or 
order,  and  does  not  destroy  the  negotiability  of  the  bill.^ 
But  where  the  entire  phraseology  indicates  that  the  pay- 
ment by  the  person,  to  whom  the  note  is  addressed,  is  re- 
quested as  a  favor  and  not  a  right,  the  courts  have  held 
that  the  pa[)er  is  not  a  negotiable  bill  of  exchange,^  But 
where  words  of  negotiability  are  inserted  in  the  paper,  the 

1  Cobb  V.  Duke,  36  Miss.  60  (72  Am.  Dec.  157);  TescJier  v.  Merea,  118 
Ind.  586  (21  N.  E.  316);  Bullard  v.  Bell,  1  Mason,  252. 

2  Weaver  v.  Scott,  32  Iowa,  22.  See  Halbert  v.  Ellwood,  1  Kan.  App. 
95  (41  P.  67). 

3  Central  Trust  Co,  v.  N.  Y.  Equipment  Co.,  74  Hun,  405  (31  Abb.  N. 
C.  121) ;  Hammett  v.  Brown,  44  S.  C.  397  (22  S.  E.  482)  ;  Brooks  v.  Brady, 
53  111.  App.  155;  Beardsley  v.  Webber  (Mich.),  62  N.  W.  173. 

4  Brown  v.  First  Nat.  Bank,  115  Ind.  572  (18  N.  E.  56);  Lesser  v. 
Scholze,  93  Ala.  Z?.^  (9  So.  539). 

5  Jarvis  v.  Wilson,  46  Conn.  90  (33  Am.  Rep.  18);  Ruff  v.  Webb,  I 
Esp.  129  (Mr.  N.  will  much  oblige  Mr,  W.  by  paying  Mr.  RufC  or  order); 
Wheatley  u.  Strobe,  12  Cal,  92  (73  Am,  Dec.  522). 

6  Gillilan  v.  Myers,  31  111.  525;  Knowlton  v.  Cooley,  102  Mass.  233. 
Thus,  '*  Mr.  Little,  please  to  let  bearer  have  £7,  and  place  it  to  my  account 
and  you  will  much  oblige  your  humble  servant."  Little  ».  Slackford, 
i  Mood.  &  M.  171. 

22 


CH.   II.]  PARTS    OF   BILLS    AND    NOTES.  §    19 

paper  is  generally  held  to  be  a  negotiable  bill,  notwith- 
standing the  dubious  phrases  of  request.^ 

Although  the  word  "  pay  "  is  customarily  employed,  it 
is  not  necessary.  Any  equivalent,  such  as  "  deliver  "  will 
be  sufficient.^ 

Whether  a  mere  due  bill,  which  generally  contains  only 
an  acknowledgment  of  a  debt,  is  to  be  treated  as  a  negoti- 
able note,  is  doubtful.  Some  of  the  American  cases  follow 
the  English  rule,  that  a  mere  naked  due  bill,  without  words 
of  negotiability,  is  not  a  promissory  note  in  any  sense.^ 
And  certainly,  without  words  of  negotiability,  the  due  bill 
is  nowhere  considered  a  negotiable  note.  But  where 
words  of  negotiability  are  employed,  and  the  due  bill  satis- 
fies all  the  other  requirements  of  negotiable  paper  as  to 
certainty  of  time  of  payment  and  amount  of  indebtedness, 
it  is  commonly  held  to  be  a  negotiable  promissory  note, 
notwithstanding  the  absence  of  a  distinct  promise  to  pay.* 

§  19.  Time  of  payment. —  In  conformity  with  the  gen- 
eral requirement  of  certainty  as  to  all  the  terms  of  the 
negotiable  instrument,  the  bill  or  note  must  indicate,  either 
expressly  or  by  implication,  the  time  of  its  payment.  Bills 
and  notes  are  usually  made  j):iyable  at  a  certain. date,  or  at 
a  stated  tin)e  afler  date,  ofltr  siyJil,  or  after  demand,  or 
they  are  made  payable  on  demand  or  at  sight.  But  this  is 
not  absolutely  necessary;  other  words  of  similar  im[)ort 
may  be  used.     So,  also,  when  no  time  of  payment  is  speci- 

1  Ruff  V.  Webb,  1  Esp.  129,  cited  supra;  Messmore  v.  Morrison,  172 
Pa.  St.  300  (34  A.  45). 

2  Lovell  17.  Hill,  G  C.  &  P.  238;  Cumminffs  v.  Gassett,  19  Vt.  308; 
Scliraitz  V.  Hawlieye  Gold  Mining  Co.  (S.  D.),  67  N.  W.  618.  See  Fur- 
ber  V.  Caverly,  42  N.  II.  74. 

»  Gay  V.  Rooke,  151  Mass.  115  (23  N.  E.  835;  Olson  v.  Peterson,  50  III. 
App.  327;  Currier  v.  Lockwood,  40  Conn.  349  (16  Am.  Rep.  40);  Hotch- 
kiss  V.  Moskey,  48  N.  Y.  478. 

*  Hussey  v.  Winslow,  59  Me.  170  (good  to  bearer);  Cummings  v. 
Freeman,  2  Humph.  144;  Gray  v.  Bowdeu,  23  Pick.  28J;  Brady  v.  Ciiand- 
ler,  31  Mo.  28;  Jacquin  v.  Warren,  40  111.  459;  Franklin  v.  March,  6  N. 

H.  304  (25  Am.  Dec.  462)  (good  to or  order) ;  Bacon  v.  Blckuell,  17 

Wis.  523. 

23 


§   20  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

fied  ill  the  instrument,  it  will  be  presumed  to  be  payable  on 
demand.^ 

When  the  word  month  is  used  in  the  statement  of  the 
time  of  payment,  a  calendar  month  is  presumed  to  have 
been  intended;  and  so  likewise  will  a  calendar  year  be  pre- 
sumed, where  the  word  yeai^  is  used.^ 

§  20.  Payment  must  be  vinconditional. —  It  is  also  a 
requisite  of  commercial  paper  that  it  must  be  payable 
absolutely,  and  at  all  events.  If  the  payment  is  made  to 
be  dependent  upon  any  contingent  event,  the  instrument 
ceases  to  be  negotiable.  In  order  to  be  negotiable,  the 
payment  must  be  unconditional.^     But  to   make  a  paper 

1  Porter  v.  Porter,  51  Me.  376;  Bacon  v.  Page,  1  Conn.  404;  Tucker  v. 
Tucker,  119  Mass.  79;  Thompsons.  Ketcham,  8  Johns.  190  (5  Am.  Dec. 
332);  Gaylord  V.  VanLoan,  15  Wend.  308;  Jones  v.  Brown,  11  Ohio  St. 
601;  Hallw.  Toby,  110  Pa.  St.  318  (1  A.  369);  First  Nat.  Bank  u.  Price, 
52  Iowa,  570  (3  N.  W.  69)  ;  Meador  v.  Dollar  Sav.  Bank,  56  Ga.  605.  And 
it  has  been  held  that  a  note  reading  "  months  after  date,"  the 
number  of  months  being  left  blank,  was  payable  on  demand.  McLean  v. 
Nichen,  3  Vict.  Rep.  107.  But  see  Wainwright  v.  Straw,  15  Vt.  215  (40 
Am.  Dec.  675).  On  the  other  hand,  a  note  reading  "  90  after 
date  "  was  presumed  to  be  payable  ninety  dmjs  after  date,  in  absence  of 
proof  to  the  contrary.     Weems  v.  Parker,  60  111.  App.  167. 

2  For  calculation  of  the  day  of  maturity,  see  post,  chapter  on  Present- 
ment for  Payment. 

3  For  examples,  see  the  following  cases  in  which  the  conditional 
character  of  the  promise  to  pay  was  held  to  destroy  the  negotiability  of 
the  bill  or  note:  White  v.  Gushing,  88  Me.  339;  34  A.  164  (order  on 
Savings  Bank,  which  requires  that  the  bank  book  shall  accompany 
the  order);  Post  v.  Kinzua  Hemlock  R.  R.  Co.,  171  Pa.  St.  615  (83 
A.  362)  ("for  rental  of  rolling  stock  under  contract  of  lease  and  con- 
ditional sale");  Sawyer  v.  Child,  68  Vt.  360  (35  A.  84);  Chandler  «. 
Carey,  64  Mich.  237  (31  N.  W.  309)  (on  the  completion  of  certain 
work);  Coolidge  v.  Ruggles,  15  Mass.  387  (provided  a  certain  ship 
shall  arrive) ;  Harris  v.  Lewis,  5  W.  Va.  575  (payable  a  certain  time 
after  "  ratification  of  peace,"  made  in  the  Southern  States  during 
the  Civil  War);  Gushing  v.  Fifield,  70  Me.  50  (35  Am.  Rep  293)  (sub- 
ject to  a  certain  contract  or  policy);  Pearson  v.  Garrett,  4  Mod.  242 
(when  a  particular  person  shall  marry) ;  Kelley  v.  Hemmingway,  13  111. 
604  (66  Am.  Dec.  474)  (when  the  maker  shall  become  of  age)  ;  Costello  v. 
Crowell,  127  Mass.  21)3  (34  Am.  Rep.  367)  (given  as  collateral  security 
with  agreement)  ;  Kingsbury  v.  Wall,  68  III.  311  (on  delivery  of  a  deed)  ; 
Van  Zandt  v.  Hopkins,  151  111.  248  (37  N.  E.  845)  (on  delivery  of  stock) ; 
Shaver  v.  West,  Un.   Tel.  Co.,  57  N.  Y.  459  ('' if  not  revoked  and  the 

24 


CH.  II.]  PARTS    OF    BILLS    AND    NOTES.  §   20 

non-negotiable  the  condition  must  be  inserted  in  the  bill 
or  note,  and  not  put  into  some  separate  collateral  agree- 
ment.^ 

The  illustrations,  given  in  the  preceding  note,  show  con- 
ditions which  mil}'  or  may  not  happen.  Where,  however, 
the  conditions,  imposed  upon  the  obligation  to  pay,  are 
certain  to  happen,  or  their  performance  is  clearly  within 
the  power  of  the  payee  or  holder,  and  the  conditions  are 
reasonable  ;  the  conditional  character  of  the  obligation  to 
pay  does  not  destroy  the  negotiability  of  the  bill  or  note. 
It  is  impossible  in  a  treatise,  designed  for  use  in  law  schools, 
to  give  full  and  complete  illustrations.  The  cases  given  in 
the  note  will  probably  suffice  to  explain  the  principle  of 
the  distinction  between  the  effect  on  the  negotiability  of 
the  paper  of  conditions,  which  are  reasonable  and  sure  to 
happen,  and  of  those  which  are  uncertain  of  occurrence. ^ 

The  more  frequent  source  of  contention  over  negotiability 
of  promissory  notes  and  bills  of  exchange,  on  account  of 
the  conditional  character  of  the  promise  to  pay,  arises  from 
stipulations,  which  make  the  time  of  payment  uncertain. 
Generally,  the  same  test  determines  the  effect  of  the  stipu- 
lation on  the  negotiable  character  of  the  paper,  viz.  :  if  the 
stipulation  only  makes  the  time  of  payment  uncertain,  and 

payee  continues  in  employ  of  the  maker");  Shackleford  v.  Hooker,  54 
Miss.  726  (after  certain  advances  were  paid). 

1  Bregler  v.  Merchants'  L.  &  T.  Co.  164  111.  197  (45  N.  E.  512). 

2  Thus  bills  and  notes  have  been  held  to  be  negotiable,  although  the 
obligation  to  pay  has  been  made  dependent  upon  the  return  of  the  note 
or  bill  (Frank  v.  Wessells,  64  N.  Y.  155) ;  "  as  per  memorandum  or 
agreement."  Jury  v.  Barker,  El.,  Bl.  &  E.  459  (96  E.  C.  L.  R.  359,  note)  ; 
First  Nat.  Bank  v.  Carson,  60  Mich.  432;  27  N.  W.  589  (this  note  to  be 
due  if  piano  sold  or  removed) ;  Kirku.  Dodge  Co.  Mut.  Ins.  Co.,  39  Wis. 
138  (15  Am.  Rep.  36)  ("  If  not  paid  at  maturity  the  whole  amount  of 
premium  on  said  policy  shall  be  considered  as  earned  and  the  policy  be 
null  and  void,  so  long  as  this  remains  unpaid").  And  see  Massey  v. 
Blair,  176  Pa.  St.  34  (34  A.  925).  And  a  note  was  held  to  be  negotiable, 
although  made  payable  on  condition  that  a  college  be  located  in  a  certain 
place,  if  the  condition  has  been  fulQlled  before  negotiation  or  transfer  of 
the  note.  Hart  v.  Taylor,  70  Miss.  655  (12  So.  553).  But  see  contra, 
Chapman  v.  Wight,  79  Me.  595;  12  A.  54(i  ("then  this  note  shall  be 
given  up  "). 

25 


§   20  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

does  not  make  the  ultimate  payment  of  the  obligation 
uncertain,  the  paper  is  negotiable  notwithstanding.  But  if 
the  stipulation  makes  the  ultimate  payment  uncertain,  it 
destroys  the  negotiability  of  the  instrument.  Thus,  it  has 
been  generally  held  that  a  note,  payable  on  or  before  a  cer- 
tain date,  is  nevertheless  negotiable,  the  maker  having 
it  in  his  power  to  accelerate  the  payment,  but  no  i)o>ver  to 
postpone  payment  beyond  the  given  date.^ 

The  same  rule  is  applied,  where  a  note  is  made  payable 
on  the  death  of  the  maker,  or  a  certain  time  after  his 
death. '^  The  negotiability  of  a  note  is  held  not  to  be 
affected  by  a  stipulation  that,  upon  the  non-payment  of  an 
installment  of  interest  or  principal,  the  whole  amount 
of  the  note  shall  thereupon  become  due  and  payable.^ 
But  when  a  bill  or  note  is  made  payable,  "  when  convenient 
or  possible,"  without  stating  any  limit  of  time  after  which 
it  shall  be  due  and  payable,  absolutely  and  at  all  events  ; 
one  can  hardly  find  any  reason  lor  holding  that  the  instru- 
ment is  negotiable.  And  there  are  many  cases,  which 
maintain  that  such  a  bill  or  note   is  non-negotiable.^     But 

1  First  Nat.  Bank  v.  Skeen,  101  Mo.  633  (H  S.  W.  732);  Goodlowe  v. 
Taylor,  3  Hawks,  458  ("  against  the  19th  of  September,  or  when  the 
house  John  Mayfleld  has  undertaken  to  build  for  me  is  completed  ") ; 
Buchanan  v.  Wren  (Tex.  Civ.  App.),  30  S.  W.  1077;  Aimer  v.  Palmer, 
10  Kan.  464  (15  Am.  Rep.  353)  (payable  ■within  a  certain  time 
or  "  as  soon  as  I  can  with  due  diligence  make  the  money  out  of  said 
patent  right");  Ernest  v.  Steckman,  74  Pa.  St.  13;  15  Am.  Rep.  542; 
(do.).  But  see,  contra,  Stults  v.  Silva,  119  Mass.  137  (18  months  from 
date  "  or  sooner  at  the  option  of  the  mortgagor  ");  Carroll  Co.  Sav. 
Bank  v.  Strother,  28  S.  C.  504;  6  S.  E.  313  (whenever  deemed  insecure). 

2  Shaw  V.  Camp,  160  111.  425  (43  N.  E.  608);  Bristol  v.  Warm  r,  19 
Conn.  7;  Conn  v.  Thornton,  46  Ala.  587;  Carnwright  v.  Gray,  127  N.  Y. 
92  (27  N.  E.  835)  ;  Martin  v.  Stone  (N.  H.),  29  A.  845. 

3  De  Hassw.  Roberts,  59  Fed.  853;  Carlou  v.  Keneally,  12  M.  &  W.  139; 
Wright  0.  Irwin,  33  Mich.  32;  May  v.  City  Bank,  58  Ga.  584;  Sea  v 
Glover,  1  111.  App.  335;  Markey  v.  Corey  (Mich.),  66  N.  W.  493;  Merrill 
V.  Hurley,  6  S.  D.  592  (62  N.  W.  958);  Stark  v.  Olsen,  44  Neb. 
646  (63  N.  W.  37).  But  see  contra,  Kimball  Co.  v.  Mellon,  80  Wis.  183 
(48  N.  W.  1100). 

*  Ex  parte  Tootell,  4  Ves.  372  (when  my  circumstances  will  admit 
without  detriment  to  myself  or  family)  ;  Nunez  v.  Dauteles,  19  Wall.  560 
("  as   soon  as  the  crop  can  be    sold,  or  the    money  raised    from   any 

26 


CH.   II.]  PARTS    OF   BILLS    AND    NOTES.  §    20 

there  are  also  many  cases  in  which  the  courts,  in  their  de- 
sire to  ascribe  the  character  of  negotiability  to  all  commer- 
cial paper,  have  held  these  phrases  to  mean  that  the  obligor 
promises  to  pay  within  a  reasonable  time,  and  have  recog- 
nized the  paper  to   be  negotiable  notwithstaiuliiig.^ 

A  bill  or  note  is  held  to  be  non-negotiable,  where  it  is 
made  payable  on  the  happening  in  the  alternative  of 
two  events,  one  of  which  is  uncertain.^  And  so, 
likewise,  where  it  is  made  payable  in  the  alternative  on 
one  of  two  dates.  But  where  the  alternative  days  of  pay- 
ment are  connected  with  the  stipulation  of  payment  in  the 
alternative  in  two  different  places,  as  where  a  note  is  made 
payable  in  New  York  on  one  day,  and  in  Liverpool  on  a 
subsequent  day,  the  note  has  been  held  to  be  nevertheless 
negotiable.^ 

It  has  also  been  held  that  a  stipulation  for  renewal  of 
the  note  destroys  its  negotiability.* 

Another  ground  for  holding  that  a  bill  or  note  is  non- 
negotiable,  because  the  promise  to  pay  is  conditional,  is 
where  it  is  made  payable  out  of  a  particular  fund  or  debt, 
so  that  its  payment  depends  absolutely  u[)on  the  existence 
of  the  fund   or  debt,  out  of  which  it  is  to  be  paid.*     But 

source  ")  ;  Salinas  v.  Wright,  11  Tex.  572  ("  as  soon  as  mycircumslances 
will  permit  "). 

^  Crocker  v.  Holmes,  65  Me.  195;  20  Am.  Rep.  687  (when  I  sell  my 
place  where  I  now  live);  Kincaid  v.  Higgins,  1  Bibb.  396  ("as  soon  as  I 
possibly  can  ")  ;  Ubsdell  v.  Cunningham,  22  Mo.  124  (to  be  paid  as  soon 
as  collected  from  my  accounts  at  P.)  ;  Works  u.  Ilershey,  35  Iowa,  340 
(when  convenient). 

-  Sackett  v.  Palmer,  25  Barb.  179.  But  see  Scull  v.  Roane,  Hempst. 
C.  C.  103. 

3  Ilenschel  v.  Mahler,  3  Hill,  132;  s.  c.  3  Denio,  428. 

^  Citizens  Nat.  Bank  v.  PioUet,  126  Pa.  St.  194  (17  A.  603);  CoUn  t7. 
Spencer,  39  Fed.  262;  Mitchell  v.  St.  Mary  (Ind.  '97),  47  N.  E.  224; 
Second  Nat.  Bank  v.  Wheeler,  75  Mich.  546  (42  N.  W.  963). 

5  Munger  v.  Shannon,  61  N.  Y  251;  Ehricks  v.  De  Mill,  75  N.  Y.  370; 
Brill  V.  Tultlc,  81  N.  Y.  454;  37  Am.  Rep.  515  ("  and  charge  the  same 
to  our  account  for  labor  and  materials  performed  and  furnished"); 
Averett's  Admr.  v.  Bookor,  15  Gratt.  163  (76  Am.  Dec.  203)  (out  of  any 
money  in  his  hands  belonging  to  mi) ;  Kelly  v.  Bronson,  26  Minn.  359 
(4  N.  W.  607);  Conroy  v.  Ferrie  (.Vliun.  97),  71  N.  W.  383. 

27 


§  21  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

when,  in  a  bill  of  exchange,  the  drawer  simply  indicates, 
by  a  reference  to  a  particular  fund  or  account,  how  the 
drawee  may  reimburse  himself,  and  does  not  intend  that 
the  payment  of  the  b'U  should  be  conditional  upon  the 
existence  or  suiBciency  of  the  fund,  the  bill  will  neverthe- 
less be  negotiable. 1  But  mere  indorsement  on  the  note 
by  the  maker,  of  the  value  of  his  property,  will  not  destroy 
its  negotiability.'^ 

§  21.  Certainty  as  to  amount  of  payment. —  Another 
requirement  to  the  negotiability  of  a  bill  or  note  is,  that 
the  amount  to  be  paid  on  the  iiistiuraont  must  be  certain, 
and  definitely  stated  in  the  body  of  the  instrument.  If, 
upon  reading  the  instrument,  the  definite  amount  of  the 
obligation  cannot  be  ascertained,  the  bill  or  note  is  non- 
negotiable,  although  the  paper  contains  references  to 
other  papers  or  accounts,  by  resort  to  which  the  amount  <>t 
payment  can  be  definitely  ascertained.  The  law-merchant 
requires  that  the  amount  due  on  the  bill  or  note  shall  be 
ascertained  from  a  reading  of  the  paper  itself.^ 

There  are,  however,  certain  well-established  exceptions  to 
the  rule  just  stated,  where  the  actual  amount  due  on  a  note 
or  bill  is  not  to  be  ascertained  on  the  face  of  the  instru- 
ment, although  the  means  of  ascertaining  the  exact  amount 
is  provided  in  the  body  of  the  instrument.  Probably,  it  is 
safe  to  say,  that  in  no  such  case  would  the  bill  or  note  be 

i  Clark  V.  Lake  Ave.  &  Loan  Ass'n,  65  Hun,  G25  (for  S.  account) ; 
Redman  v.  Adams,  51  Mo.  429  (  "aud  charpje  the  same  against  whatever 
amount  may  be  due  for  my  share  of  fish  "  )  ;  Ellet  v.  Bdtton,  6  Tex.  229 
(in  full  of  a  certain  judgment  mentioned  in  bill). 

2  Hudson  V.  Emmons  (Mich.),  65  N.  W.  542. 

3  Cushman  v.  Haynes,  20  Pick.  132  ("  deducting  all  advances  and 
expenses  "");  Jones  v.  Simpson,  2  B.  &  C.  318  ("  the  proceeds  of  a  ship- 
ment of  goods,  value  about  £2000,  consigned  by  me  to  you  ")  ;  Legio  v. 
Staples,  16  Me.  252  ("whatever  you  may  collect  for  me  from  A."); 
Dodge  V.  Emerson,  34  M.  E.  96  (a  certain  sum  and  "all  other  f-ums 
that  shall  be  due  him  ");  Culbertson  v.  Nelson,  93  Iowa,  187  (61  N.  W. 
854);  Palmer  v.  Ward,  6  Gray,  340;  Fralich  v.  Norton,  2  Mich.  130  (55 
Am.  Dec.  56).  And  see  Brooks  v.  Struthers  (Mich.  97)  68  N.  W.  272; 
Carmody  v.  Crane  (Mich.  97),  68  N.  W.  268  (provision  for  payment  of 
taxes) . 

28 


CH.  II.]  PARTS    OF    BILLS    AND    NOTES.  §   21 

declared  to  he  negotiable,  if  the  source  of  information  as 
to  the  exact  amount  due  was  not  public  property,  and  was 
within  the  more  or  less  exclusive  control  of  one  of  the  par- 
ties to  the  paper. 

It  needs  no  authority  to  support  the  claim  to  negotiabil- 
ity of  a  bill  or  note,  which  contains  a  stipulation  for  the 
payment  of  a  certain  rate  of  interest  on  the  principal  sum.^ 
So,  also,  although  among  the  earlier  authorities  some  doubt 
was  expressed  as  to  the  negotiability  of  a  bill  or  note, 
^hich  was  made  payable  icitli  excJiange  on  some  money 
center;  it  is  generally  held  now,  that  the  negotiability  of 
such  an  instrument  is  not  affected  by  a  stipulation  for  pay- 
ment luiUi  exchange?  Where  a  note  or  bill  contains  a  stip- 
ulation for  the  principal  sum  and  interest,  loiih  attorneys^ 
fees  and  costs  of  collection,  the  authorities  are  more  evenl}'' 
divided,  whether  such  a  stipulati(m  destroys  the  negotiabil- 
ity of  the  instrument. "^     The  same  contradiction  of  authority 

1  And  the  fact,  that  the  note  calls  for  a  higher  rate  of  in'erest  after 
maturity,  is  held  not  to  destroy  it  negotiability.  Crunap  v.  BiTdan,  97 
Mich.  293;  56  N.  W.  559;  Hope  v.  Barker,  112  Mo.  338  (20  S.  W.  567); 
contra,  Hegeler  v.  Cotnstock,  1  S.  D.  138  (45  N.  W.  331). 

2  Price  V.  Teall,  4  McLean,  201;  Morgan  v.  Edwards,  53  Wis.  599  (11 
N.  W.  21);  Bullock  v.  Taylor,  39  Mich.  137;  Culbertson  v.  Nelson,  93 
Iowa,  187  (61  N.  W.  854)  ;  First  Nat.  Bank  v.  Dubuque  S.  W.  R.  R.  Co., 
52  Iowa,  378  (35  Am.  Rep.  280;  3  N.  W.  395),  Si-e  contra  Low  v.  Bliss,  24 
111.  168  (7G  Am.  Dec.  742) ;  Fitzharris  v.  Leggatt,  10  Mo.  App.  527;  First 
Nat.  Bank  v.  Slette  (Minn.  97)  ;  69  N.  W.  1148.  See  Second  Nat.  Bank  v. 
Basuier,  12  C.  C.  A.  517;  65  F.  58,  and  contra,  Carroll  Co.  Sav.  Bk.  v. 
Strolher,  28  S.  C.  504  (6  S.  E.  313). 

^  That  it  does  not  destroy  its  negotiability,  see  Oppenheimer  v.  Farm- 
ers' Bank,  97  Tenn.  19;  36  S.  W.  705;  Smith  v.  Muucie  Nat.  Bank,  29 
Ind.  158;  Stapleton  v.  Louisville  Banking  Co.,  95  Ga.  802  (23  S.  E.  81)  ; 
Ilowentein  v.  Barnes,  5  Dill.  482;  Dorsey  v.  Wolff,  142  111.  589  (32  N.  E. 
495)  ;  Sperry  v.  Horr,  32  Iowa,  184;  Gilraore  v.  Hirst,  56  Kan.  626  (44  P. 
603)  ;  Md.  Fertilizing  Co.  v.  Newman,  60  Md.  584 ;  Stark  v.  Olsen,  44  Neb. 
646  (63  N.  W.37);  First  Nat.  Bank  v.  Slaughter,  98  Ala.  602  (14  So.  545). 
That  the  stipulation,  though  good  and  valid,  destroys  the  negotiability  of 
the  instrument,  see  Woods  v.  North,  84  Pa.  St.  407  (24  Am.  Rep.  201); 
Clark  V.  Barnes,  58  Mo.  App.  667;  First  Nat.  Bank  v.  Gay,  63  Mo.  33  (21 
Am.  Rep.  430)  ;  Adams  v.  Seaman,  82  Cal.  636  (23  P.  53)  ;  Jones  v  Radlitz, 
27  Minn.  240  (6N.  W.  800)  ;  Nicely  v.  Commercial  Bank,  15  Ind.  App.  563 
(44  N.  E.  570)  ;  First  Nat.  Bank  v.  Laughlin,  4  N.  D.  391  (61  N.  W.  473)  ; 
Second  Nat.  Bank  v.  Basuier,  12  C.  C.  A.  517;  65  F.  58.     In  a  few  States, 

29 


§   22  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

exists  as  to  the  effect  of  the  insertion  in  a  note  of  an 
authority  to  confess  judgments.^  A  stipulation  in  a  note, 
that  the  maker  shall  pay  all  assessments  of  taxes  against 
property,  on  which  a  mortgage  was  given  to  secure  the 
payment  of  the  note,  destroys  its  negotiability. ^  But  in- 
dorsements of  credits  on  the  back  of  a  note  or  bill  would 
not    affect    its  negotiability.^ 

§  22.  Payment  in  money  only. —  Another  requisite  of 
negotiability  is,  that  the  instrument  should  call  only  for  the 
pa3'ment  of  money.  If  the  instrument  should  call  for  the 
doing  or  buying  of  something  else,  or  for  the  payment  of 
money  or  the  delivery  of  something  else  in  the  alterna- 
tive, negotiability  is  denied  to  the  instrument,  and  it 
becomes  a  non-negotiable  contract.*  In  the  contem- 
plation of  the  law,  money  is  any  medium  of  ex- 
change which  is  recognized  by  the  law  of  the  country, 
in  which  the  bill  or  note  is  made  or  to  be  performed,  as 
a  legal  tender  in  the  satisfaction  of  debts.  Two  proposi- 
tions, deducible  from  that  definition,  are  to  be  borne  in 
mind;  First.  Anything  which  the  law  declares  to  be  legal 
tender  is  money,  and  nothing  else.  /Secondly.  Foreign 
money  is  not  legal  tender,  in  the  satisfaction  of  domestic 
debts.     In    this    country,    at    the   present    day    (1898), 

the  stipulation  for  attorneys'  fees  or  costs  of  collection,  in  addition  to 
lawful  interest,  is  held  to  be  a  violation  of  the  laws  against  usury.  State 
V.  Taylor,  10  Ohio,  378;  Dow  v.  Updike,  II  Neb.  95;  Boozer  v.  Anderson, 
42Aik.  167. 

1  That  the  note  is  npgotiable,  see  Oaborn  v.  Hawley,  19  Ohio,  130; 
Zimmerman  v.  Anderson,  67  Pa.  St.  421  (5  Am.  Rep.  447).  That  it  is 
thereby  made  non-negotiable,  see  Law  v.  Crawford,  67  Mo.  App.  150; 
First  Nat.  Bank  v.  Marlow,  71  Mo.  618;  Sweeney  v.  Thickstun,  77  Pa.  St. 
131. 

2  Walker  v.  Thompson  (Mich.),  66  N.  W.  584. 

3  Farmers'  Bank  of  Springville  v.  Shippey,  182  Pa.  St.  24  (37  A.  844). 

*  Hodges  V.  Shuler,  22  N.  Y.  114  (promise  to  pay  $1,006  or  upon  sur- 
render of  note  to  issue  stock,  etc.) ;  Lawrence  v.  Dougherty,  5  Yerg.  435 
(payable  "in  ginned  cotton,  at  eight  cents  per  pound");  Auerbach  v. 
Pritchett,  68  Ala.  451;  Culbertson  v.  Nelson,  93  Iowa,  187  (61  N.  W. 
854).  But  see  contra  Borah  v.  Curry,  12  111.  66;  Bilderback  u.  Burlin- 
game,  27  111.  341. 

30 


CH.  II.]  PARTS    OF    BILES    AND    NOTES.  §   22 

gold  and  silver  dollars,  and  the  United  Treasury  notes, ^ 
are  legal  tender.  A  bill  or  note,  calling  for  the  payment 
of  anything  else,  is  non  negotiable.  But  it  is  permissible  to 
provide  that  the  bill  or  note  shall  be  p:iyable  in  only  one 
of  these  three  kinds  of  legal  tenders,  as,  for  ex  imple  '*  pay- 
able in  gold  coin."  2  A  bill  or  nf)te,  made  expressly  pay- 
able ill  National  bank  notes,  would  undoubtedly  be  non- 
negotiable. 

Prior  to  the  civil  war  in  this  country,  the  State  banks 
issued  notes,  which,  under  the  law,  passed  as  currency,  and 
their  value  was  more  or  less  depreciated.  It  became  a 
common  custom  for  bills  and  notes  to  be  made  payable  in 
a  particular  currency.  There  can  be  little  doubt  that  such 
bills  and  notes  were  non-negotiable,  according  to  the  com- 
mon law  merchant. "^  And  under  that  banking  system 
it  was  the  rule,  rather  than  the  exception,  for  bills  and 
notes  to  be  made  payable  in  a  particular  currency,  or 
generally,  "  in  current  funds  "  '♦  in  currency  "  "  in  good 
current  money,"  and  the  like.  Currency  has  a  broader 
signification  than  money,  and  includes  every  medium  of 
exchange,  although  it  may  not  be  legal  tender.  When  Con- 
gress declared  the  United  States  Treasury  notes  to  be  legal 
tender,  some  of  the  courts  held  that,  when  a  bill  or 
note  was  made  payable  "  in  current  funds,"  "  in  currency  " 
and  the  like,  without  specifying  any  particular  currency, 
the  paper  must  be  construed  as  calling  for  payment  in  the 
legal  tender  of  the  country.* 

»  As  to  the  power  to  declare  these  notes  legal  tender,  see  Tiedeman's 
Limitations  of  Police  Power,  §  90. 

2  Chrysler  v.  GriswoM,  42  N.  Y.  200;  Burton  v.  Brooks,  25  Ark.  215 
(payable  in  Greenback  currency),  meanin<;  United  States  Treasury  notes; 
Wright  V.  Morgan  (TiX.  Civ.  App.),  37  S.  W,  627  (payable  in  gold). 

3  Wright  V.  Hart,  44  Pa.  St.  45t  (in  current  funds  of  Pittsburg)  ; 
Leiberv.  Goodrich,  5  Cow.  186  (in  Pennsylvania  or  New  York  currency)  ; 
Pardee  v.  Fish,  GO  N.  Y.  205  (19  Am.  Rep.  170) ;  Diliard  v.  Evans,  4  Ark. 
175  (in  common  currency  of  Arkansas);  Warren  v.  Brown,  04  N.  C.  381 
(in  current  notes  of  North  Cnrolina) ;  Lange  r'.  Kohne,  1  McCord,  115 
(in  paper  medium);  Taylor  v.  Neblett,  4  Ileisk.  401  ('-In  Tennessee 
money  "). 

<  Bull   V.  Bank  of  Kasson,  123  U.  S.  105;  Frank  v.  Wessels,  64  N.  Y. 

31 


§  22  PARTS    OF   BILLS    AND    NOTES.  [CH.  II. 

It  is  not  objectionable  to  the  negotiable  character  of  a 
bill  or  note  that  it  calls  for  the  payment  of  a  certain 
quantity  of  foreign  money  ;  but  if  it  is  made  payable  in 
foreign  money,  it  is  non-negotiable.  Where  the  denomi- 
nations of  the  foreign  money  are  different  from  those  of  the 
domestic  money,  no  difficulty  can  arise  from  the  fact  that  the 
paper  calls  for  the  payment  of  a  certain  amount  of  foreign 
money.  But,  where  the  denominations  are  the  same  in  both 
countries,  it  is  difficult  to  determine  whether  the  reference 
to  foreign  money  is  intended  to  indicate  the  value  of  the 
money  called  for  by  the  paper,  or  that  it  shall  be  payable  in 
the  foreign  money.  Thus,  Canada  and  the  United  States 
havethe  same  denominations  ;  and  during  the  Civil  War,  when 
the  United  States  money  was  depreciated,  it  was  customary 
in  trade  on  the  border  to  insert  in  notes,  which  were  made 
on  a  specie  or  gold  basis,  that  they  were  payable  in  Canada 
money.  In  two  cases,  arising  in  Michigan  and  New  York, 
two  opposite  conclusions  were  reached  as  to  the  effect  of 
this  provision.  In  the  Michigan  case,  the  court  held  that 
the  note  could  only  be  paid  in  Canada  money,  and  hence 
was  non-negotiable  ;  and  in  the  New  York  case,  it  was  held 
that  the  parties  had  used  the  phrase  to  indicate  the  amount 
in  specie  which  was  to  be  paid,  and  that  the  note  was  nego- 
tiable, because  it  could  be  liquidated  by  the  payment  of 
United  States  Treasury  notes  of  the  same  value  as  the 
Canada  dollar.^ 

The  denomination  of  money  must  generally  be  stated  in 
the  body  of  the  instrument.  It  need  not,  however,  be  writ- 
ten in  words;  the  denominational  mark,  for  example,  •'  £  " 
or  '*  $  "  being  sufficient,  whether  it  appears  in  the  body  of 
the  instrument  or  in  the  marginal  note,  the  payee  or  holder 

155;  Burton  v.  Brooks,  25  Ark.  215.  But  see,  contra,  Huse  v.  Hamblln, 
29  Iowa,  501  (4  Ana.  Kep.  244).  Where  the  instrument  is  made  payable 
"  in  good  current  money  "  and  the  like,  the  construction,  that  only  legal 
tender  was  intended,  becomes  more  rational.  AVharton  v.  Morris,  1 
Dall.  133  (in  lawful  current  money  of  Pennsylvania)  ;  Black  v.  Ward,  27 
Mich.  191  (15  Am.  Rep.  162). 

1  Thompson  v.  Sloan,  23  Wend.  71  (35  Am.  Dec.  546);  Black  v.  Ward, 
27  Mich.  191  (15  Am.  Rep.  162). 
32 


CH.  II.]  PARTS    OF   BILLS    AND   NOTES.  §  23 

being  impliedly  authorized  in  that  case  to  fill  in  the  denom- 
ination.^ 

It  is  customary  to  write  the  sum  of  money  in  full  in  the 
body  of  the  instrument,  and  to  express  it  in  figures  in  the 
upper  or  lower  left-hand  corner.  But  the  statement  in 
figures  in  the  corner  is  only  a  memorandum  and  does  not 
constitute,  in  the  contemplation  of  commercial  law,  any 
part  of  the  instrument.  Where  there  is  a  variance  between 
the  figures  so  placed  and  the  written  words  in  the  body  of 
the  instrument,  the  written  words  will  invariably  determine 
the  amount  called  for  ;  but  the  figures  in  the  margin  can  be 
pjfoperly  referred  to,  where  the  written  words  are  indis- 
tinct, for  the  purpose  of  verification  of  the  amount  which  is 
presumably  required  to  be  paid  on  the  instrument.^  So  im- 
material are  the  figures  in  the  margin  of  a  bill  or  note,  that 
it  is  held  not  to  be  a  forgery  to  alter  them,  so  as  to  make 
them  conform  to  the  written  statement  of  the  amount  in 
the  body  of  the  instrument  ;  ^  and  if  the  amount  to  be  paid 
is  not  stated  in  the  body  of  the  bill  or  note,  it  is  a  defective 
instrument,  and  resort  to  the  marginal  figures  cannot  sup- 
ply the  deficiency.* 

§  23,  The  place  of  payment. —  If  no  place  of  payment  is 
given  in  the  bill  or  note,  it  is  payable  at  the  place  of  husi- 
n^^ss  of  the  primary  obligor;  and  at  his  residence,  if  he  have 
no  place  of  business.  If  it  is  a  note,  it  is  payable  at  the 
maker's  place  of  business  or  residence  ;  and  if  it  is  a  bill, 
it  must  be  presented  for  acceptance  and  payment  at  the 
place  of  business  or  residence  of  the  drawee  and  acceptor. 
If  the  bill  or  note  states  a  place  of  payment,  presentment 

1  Sweetser  v.  French,  13  Met.  262;  Beardsley  v.  Hill,  61  111.  354. 

2  Com.  V.  Emigrant  Ins.  Bank,  98  Mass.  12  (93  Am.  Dec.  126);  Riley  y. 
Dickens,  19111.29;  Norwich  Bank  v.  Hyde,  13  Conn.  279;  Hollen  ».  Davis, 
59  Iowa,  444  (44  Am.  Rep.  G8S). 

3  Sweetser  v.  French,  13  Met.  262. 

*  Hollen  V.  Davis,  59  Iowa,  444  (44  Am.  Rep.  688);  Norwich  Bank 
V.  Hyde,  13  Conn.  279.  But  see  contra,  Garrett  v.  Interstate  Bauk, 
79  Tex.  133  (15  S.  W.  274).  See  post,  §  28,  as  to  authority  to  fill  up 
Urnnks. 

3  33 


§   24  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

must  be  made  at  that  place,  in  order  to  hold  the  drawer 
sureties  and  indorsers  liable.^ 

Generally,  it  is  not  necessary  to  the  negotiability  of  a 
bill  or  note,  to  insert  a  statement  of  a  place  of  payment. 
But  in  some  of  the  States,  it  is  now  required  by  statute.^ 

§  24.  Acknowledgment  of  consideration. —  It  is  an 
almost  invariable  custom  to  insert  in  a  bill  or  note  the 
words  value  received.,  or  others  of  like  import,  as  an 
acknowledgment  of  the  receipt  of  a  consideration  from 
the  payee.  But,  although  it  was  at  an  early  date  held 
essential  to  the  negotiability  of  bills  of  exchange,  it  is  now 
very  generally  held  in  the  United  States,  as  well  as  in 
England,  that  no  acknowledgment  of  consideration  is  nec- 
essary to  the  negotiability  of  such  instruments,  except  in 
the  case  of  promissory  notes,  where  the  local  statute,  in 
giving  the  character  of  negotiability  to  notes,  requires  the 
general  acknowledgment  of  consideration.^  When  the 
words  value  received  are  inserted  in  a  note,  it  is  held  to  be 
an  acknowledgment  of  consideration  between  the  maker 
and  payee  ;  but  in  a  bill,  it  is  prima  facie  evidence  of  con- 
sideration between    the  drawee  and    payee,  as   a   general 

1  Cox  V,  National  Bank,  100  U.  S.  704;  Bank  of  United  States  v.  Smith, 
11  Wheat.  171;  Hills  v.  Place,  48  N.  Y.  520  (8  Am.  Rep.  568). 

2  Cox  V.  National  Bank,  100  U.  S.  704,  construing  the  Alabama 
statute.  In  Virginia,  it  is  required  that  the  bill  or  note  shall  be  payable 
at  a  particular  bank  or  business  office.  Freeman's  Bank  v.  Ruckman,  16 
Gratt.  126;  Holloway  v.  Porter,  46  Ind.  62.  See  Anniston  L.  &  T.  Co.  v. 
Stickney,  108  Ala.  146  (19  So.  03),  where  it  is  held  that  the  place  of  pay- 
ment may  be  shown  by  parol  evidence,  where  such  stipulation  of 
place  of  payment  is  necessary  to  negotiability  of  a  bill  or  note. 

3  Noyes  v.  Gilman,  65  Me.  589;  Courtney  v.  Doyle,  10  Allen,  122; 
Hook  V.  Pratt,  78  N.  Y.  371  (34  Am.  Rep.  539);  Bristol  v.  Warner,  19 
Conn.  7;  Dtan  v.  Carrulh,  108  Mass.  242;  People  v.  McDermott,  8  Cal. 
288.  It  seems,  also,  that  "  value  received,"  or  some  other  acknowledg- 
ment of  consideration,  is  not  always  held  to  be  necessary  to  the  negotia- 
bility of  a  promissory  note,  even  though  the  statute  enumerates  it  as  one 
of  the  elements  of  a  negotiable  note.  Bailey  v.  Smock,  61  Mo.  213. 
Acknowledgment  of  consideration  not  required  in  Illinois  to  make  com- 
mercial paper  negotiable.  Haines  v.  Nance,  52  lil.  App.  406  (Rev.  Stat. 
Ill.,ch.98,  §3).  But  see  Hart  i?.  Harrison  Wire  Co.,  91  Mo.  414  (4  S.  W. 
123). 

34 


CH.   II.]  PARTS    OF    BILLS    AND    NOTES.  §    25 

rule,  i.  e.,  where  the  bill  is  drawn  payable  to  the  order  of  a 
third  person.  But  where  the  bill  is  made  payable  to  the 
drawer's  order,  so  that  the  drawer  and  payee  are  the  same 
persons,  it  is  presumed  to  be  an  acknowledgment  of 
consideration  between  the  drawer  and  drawee  or  acceptor.^ 

The  words  value  received  imply  that  there  has  been  a 
valuable  and  substantial  consideration.^  But  it  is  always 
possible  to  show  by  parol  evidence  that,  notwithstanding 
this  acknowledgement  of  consideration,  no  consideration 
actually  passed  between  the  parties. "^  , 

Although  it  is  not  necessary  to  do  more  than  to  insert  a 
general  acknowledgment  of  consideration,  by  the  use  of 
such  words  as  for  value  received^  the  specific  considera- 
tion of  the  bill  or  note  may  be  inserted  without  affecting 
the  negotiability  of  the  instrument,  even  though  the  par- 
ticular consideration  cannot  be  proven.  The  general  impli- 
cation of  consideration  will  enable  the  parties  to  prove  the 
actual  consideration,  whatever  it  is.* 

§  25.  Sealed  instruments  not  negotiable. —  The  weight 
of  authority  is  decidedly  in  favor  of  the  proposition  that, 
in  the  absence  of  statutory  regulations  to  the  contrary,  the 
sealing  of  a  bill  or  note  w\\\  destroy  its  negotiability,  not- 
withstanding that  the  geneial  common  law  prohibition  of 
the  assignment  of  choses  in  action  has  been  repealed.  It  is 
still  held  to  be  a  requisite  of  bills  and  notes  that  they  must 
be  open  letters,  i.  e.,  unsealed.^ 

>  Highmore  v.  Primrose,  5  M.  &  S.  65;  Mandeviller.  Welch,  5  Wheat. 
277. 

2  Mandeville  v.  Welch,  5  Wheat.  277;  Delano  v.  Bartlctt,  6  Cush. 
304;  Williamson  v.  Cline  (W.  Va.),  20  S.  E.  917;  Hill  v.  Todd,  29  111. 
101 ;   MuUer  v.  Cook,  23  N.  Y.  49.5;  Martin  v.  Hazard,  2  Colo.  596. 

3  Schoonraaker  V.  Roos.i,  17  Johns.  301;  Russell  v.  Hall,  10  Mart.  (8 
Ls.  N.  s.)  288;  Parish  v.  Stone.  14  Pick.  198  (25  Am.  Dec.  373) ;  Snyder 
V.  Jones,  38  Md.  542. 

*  Sylvester  v.  Staples,  44  Mc  496;  Corbett  v.  Clark,  45  Wis.  403  (30 
Am.  Rep.  763;  Abbott  v.  Hendricks,  1  Man.  &  Gr.  791;  Buchanan  v. 
Wren,  Ti-x.  Civ.  App.  (30  S.  W.  1077). 

5  Frenall  u.  Fitch,  5Whart.  325;  Warren  v.  Lynch,  5  Johns.  239;  Lewis 
V.  Wilson,  5  Blackf.  370;  Sidle  v.  Anderson,  45  Pa.  St.  464;  Barden  v. 
Southerland,  70  N.  C.  528;  Rawson  v.  Davidson,  49  Mich.  607;  Osbornu. 

35 


§   26  PARTS    OF    BILLS    AND    NOTES.  [CH.   II. 

If  a  bill  or  note  is  sealed  by  the  use  of  a  wafer  or  an 
impression  on  wax,  there  can  be  no  doubt  that  it  was 
intended  to  make  it  a  sealed  instrument,  and  to  take  from 
it  the  character  of  negotiability,  allhoiigh  no  reference  is 
made  to  sealing  in  the  body  of  the  instrument.  But  if  the 
sealing  consists  of  a  scroll, —  which  in  most  of  the  United 
States  is  a  sufficient  sealing,  only  when  there  is  a  reference 
to  sealing  in  the  body  of  the  instrument, —  affixing  the 
scroll  does  not  make  a  bill  or  note  a  sealed  instrument, 
unless  in  the  body  of  the  instrument  it  is  stated  that  it 
has  been  sealed.^ 

Where  the  party,  executing  a  bill  or  note,  is  a  corpora- 
tion, the  addition  of  the  seal  does  not  ordinarily  destroy 
its  negotiability,  in  any  case.^ 

§  26.  Delivery. —  Until  the  bill  or  note  has  been  de- 
livered, it  can  have  no  validity;  and,  although  delivery  is 
presumed  to  have  been  made  on  the  given  date  of  the  paper, 
this  presumption  can  be  overthrown  by  parol  evidence  of  a 
delivery  on  some  other  day,  preceding  or  following  the  date. 
In  such  a  case,  the  life  of  the  bill  or  note  begins  on  the  actual 
day  of  delivery,  and  not  on  the  stated  date  of  the  paper. ^ 

Kistler,  35  Ohio  St.  89.  One  must  bear  in  mind  in  this  connection  the  dis- 
tinction already  made  (.^ee  ante,  §  17)  between  negotiability  and  assign- 
ability. The  sealed  note  or  bill  is  assignable,  but  the  assignee  takes  it 
subject  to  equitable  defenses.  Clute  v.  Robison,  2  Johns.  595;  Hall  v. 
Hicl^man,  2  Del.  ch.  318;  Barrow  i'.  Bispham,  6  Halst.  116;  Heifer  v. 
Alden,  3  Minn.  332;  Parks  v.  Duke,  2  McCord,  380.  And  no  days  of 
grace  are  allowed  on  a  scaled  note  or  bill.    Skidraore  v.  Little,  4  Tex.  301. 

1  Humphries  v.  Nix,  77  Ga.  98 ;  Van  Bockkellen  v.  Taylor,  62  N.  Y.  105 ; 
Bancroft  v.  Haines,  13  Pa.  Co.  Ct.  116;  2  Pa.  Dist.  373.  In  some  of  the 
States,  by  statute,  instruments,  which  would  otherwise  be  negotiable, 
are  not  change  1  in  character  by  being  sealed.  For  these  States,  see 
Tiedeman  Com.  Paper,  §  32. 

2  Central  Nat.  Bank  v.  Railroad  Co.,  5  S.  C.  156  (22  Am.  Rep.  12) ; 
Dutton  V.  Marsh,  L.  R.  6  Q.  B.  861;  In  re  Imperial  Land  Co.,  L.  R.  11  Eq. 
498;  Jackson  v.  Myers,  43  Md.  452.  But  see  contra,  Clark  v.  Farmers 
Mfg.  Co.,  15  Wend.  256.  As  to  the  use  of  the  seal  in  the  execution  of 
bonds,  see  Tiedeman's  Com.  Paper.,  Chap.  XXV.;  and  the  use  of  a  seal 
by  a  private  corporation  in  the  execution  of  a  bill  or  note,  see  post,  §  45. 

3  Cransan  v.  Goss,  107  Mass.  439  (9  Am.  Rep.  45)  ;  Lovejoy  y.  Whipple 
18  Vt.  379  (46  Am.  Dec.  157);   Gale  v.  Miller,  54  N.  Y.  536;  Marvin  t?. 

36 


CH.   II.]  PARTS    OF    BILLS    AND    NOTES.  §   26 

But  the  maturity  of  the  paper,  where  it  is  made  payable 
so  many  days  after  date^  is  computed  from  the  stated  date, 
and  not  from  the  actual  day  of  delivery.^  So  necessary  is 
delivery  to  the  life  of  a  bill  or  note,  that  if  it  is  found  in 
his  possession  after  the  death  of  the  maker  or  drawer,  the 
payee  cannot  sue  the  estate  on  it ;  nor  does  the  payee  ac- 
quire title  to  the  instrument,  if  it  is  subsequently  delivered 
to  him  by  the  personal  representative  of  the  deceased 
maker  or  drawer. ^  The  same  rule  ol)tains  in  the  case  of 
a  partnership  note,  not  delivered  before  the  dissolution  of 
the  firm.  It  cannot  be  delivered  afterward  except  with  the 
consent  of  all  the  partners,^  and  it  is  to  be  presumed  that  it 
cannot  be  delivered  at  all,  where  the  dissolution  of  the 
partnership  resulted  from  the  death  of  one  of  the  partners. 
If  a  bill  or  note  is  delivered  to  the  personal  agent  of  the 
drawer  or  maker,  the  delivery  is  not  complete,  so  as  to 
pass  title,  until  the  agent  has  in  turn  delivered  it  to  the 
payee  or  his  agent.  Until  such  second  delivery,  the  maker 
or  drawer  can  recall  it  from  the  agent. ^  And  this  prin- 
ciple has  been  applied  to  the  tranj5mi.s!!ion  of  a  bill  or 
note  by  mail  to  the  payee.  As  long  as  it  is  in  (ran.sil,  it 
can  be  recalled,  and  the  recall  will  prevent  any  acquisition 
of  title  thereto  by  the  payee  ;  since  the  postal  authorities 

McCullum,  20  Johns.  288;  Thomas  v.  Watkins,  16  Wis.  549;  Dunavan  t;. 
Flynn,  118  Mass.  637;  Richards  v.  Darst,  51  111.  HO. 

1  Powell  V.  Waters,  8  Cow.  Ol^'J;  Bumpass  v.  Timms,  3Sneed.  459.  See 
ante,  §§  7,  8. 

2  Smith  V.  Wyckoff,  3  Sandf.  Ch.  77;  Clark  v.  Sigourney,  17Coun.  511,; 
Purviancc  v.  Jones,  120  Ind.  1(J2  (21  N.  E.  1099);  Perry  v.  Crammoud,  1 
Wash.  C.  C.  100.  The  latter  case  holding,  however,  that  the  payee  has  a 
claim  on  the  undelivered  note,  jl  he  had  actually  parted  with  the  consid- 
eration for  the  same.  This  is  more  properly  described  as  a  claim  against 
the  estate  for  a  return  of  the  cou.sideration.  And  where  a  note  is  re- 
tained by  maker  as  agent  of  payee,  the  personal  representatives  may 
deliver  it  after  death  of  maker.     Welch  v.  Daraeron,  47  Mo.  App.  221. 

3  Gale  V.  Miller,  54  N.  Y.  53G;  Woodford  v.  Dorwin,  3  Vt.  82  (21  Am. 
Dec.  573). 

*  Devries  v.  Shumate,  53  Md.  211;  Brind  v.  Hampshire,  1  M.  &  W. 
365.  Otherwise,  where  third  party  is  agent  of  both  parties.  Sto:kton 
Sav.  &.C.  Soc.  V.  Giddings,  96  Cal.  84  (30  P.  1016).  See  Morris  v.  Preston, 
93  111.  215. 

37 


§   26  PARTS    OF    BILLS    A^D    NOTES.  [CH.  H. 

arc  for  that  transaction  held  to  be  the  agent  for  delivery 
of  the  maker  or  drawer.^  But  if  it  is  not  recalled,  the 
deposit  of  the  letter,  containing  the  bill  or  note,  in  the 
mail  constitutes  a  suflScient  delivery  to  pass  title. ^ 

Where,  however,  the  note  or  bill  is  delivered  to  an  agent 
of  the  payee,  or  to  a  custodian  or  bailee,  who  is  to  deliver 
it  to  the  payee  at  his  convenience,  upon  certain  conditions, 
or  at  a  certain  time  in  the  future,  the  delivery  is  complete, 
and  title  passes,  even  though  the  delivery  to  the  payee  is 
not  made  until  after  the  death  of  the  maker  or  drawee.^ 
But  delivery  to  a  stranger  Is  not  good,  i.  e.,  where  the 
stranger  cannot  be  considered  in  any  sense  as  a  bailee  or 
agent  of  the  payee,* 

The  delivery  must  also  be  made  with  the  intention  to 
pass  title  and  to  complete  the  transaction.  If  the  note  or 
bill  be  handed  to  the  payee  or  his  agent,  solely  for  the  pur- 
pose of  examination,  or  with  the  understanding  that  no 
title  shall  pass  before  performance  of  a  condition;  the 
delivery  is  not  complete,  and  suit  cannot  be  maintained 
by  payee  on  that  paper. ^  In  this  discussion  of  these 
unusual  methods  of  delivery,  the  effect  of  the  same  is  here 

1  Muller  V.  Pondir,  55  N.  Y.  325  (14  Am.  Rep.  259).  In  this  case  a 
letter  containing  the  note  was  given  to  malier's  agent  in  Havana,  to  be 
mailed  when  the  vessel  arrived  at  New  York.  And  see  Norton  v.  Norton, 
49  Hun,  605. 

2  Kirkman  v.  Bank  of  America,  2  Coldw.  397;  Mitchell  v.  Byrne,  6 
Rich.  171;  Hyde  u.  Goodnow,  3  N.  Y.  266;  Ex  parte  Cote,  L,  R.  9.  Ch. 
App.  27. 

3  Giddings  v.  Giddings,  51  Vt.  227  (31  Am.  Rep.  682) ;  Mason  v.  Hyde, 
41  Vt.  432;  Richardson  v.  Lincoln,  5  Met.  201 ;  Bodley  v.  Higgins,  73  111. 
375;  Shaw  V.  Camp,  160  111.  425  (43  N.  E.  608),  Elliott  v.  Deasou,  64  Ga. 
63;  Stockton  Sav.  &c.  Soc.  v.  Giddings,  96  Cal.  84;  30  P.  1016  (third 
party  was  agent  of  both  parties). 

4  Gordon  v.  Adams,  127  111.  223  (19  N.  E.  557) ;  Adams  Bank  v.  Jones, 
16  Pick.  574. 

5  Carter  v.  McClintock,  29  Mo.  464;  Hurt  v.  Ford  (Mo.),  36  S,  W. 
671  Ruggles  V.  Swanwick,  6  Minn.  526;  Dodd  v.  Dunne,  71  Wis.  578  (37 
N.  W.  430).  And  the  same  rule  holds,  where  a  note  is  executed  and 
delivered  in  jest.  Shipley  v.  Carroll,  45  111.  285,  But  a  note  or  bill  is 
presumed  to  have  been  delivered  when  it  is  in  possession  of  the  payee. 
Garrigus  v.  Home  &c.  Soc,  3  Ind,  App.  91 ;  28  N.  E.  1009. 

38 


CH.   II.]  PARTS    OF    HILLS    AND    NOTES.  §    27 

considered,  only  as  it  bears  upon  the  rights  of  the  imme- 
diate payee,  and  the  rights  of  subsequent  bona  fide  holders 
are  not  taken  into  consideration.  Their  rights  are  con- 
sidered in  a  subsequent  chapter.^ 

Inasmuch  as  the  life  of  a  contract  begins  on  the  day  of 
delivery,  its  validity  is  determined  then,  and  not  by  its 
stated  date.  Where,  therefore,  the  State  law  makes  con- 
tracts invalid,  when  made  on  Sunday ;  if  a  note  is  delivered 
on  Sunday  it  is  invalid,  although  it  may  bear  a  different 
date.  On  the  other  hand,  if  it  is  dated  and  executed  on 
Sunday,  but  it  is  not  delivered  on  that  day,  it  is  not  a  Sun- 
day contract,  and  is  valid,  although  the  maturity  is  computed 
from  the  date  given. ^ 

§  27.  Delivery  as  an  escrow. —  An  e.s6T0?«  is  generally 
defined  as  a  legal  instrument ,  delivered  to  a  third  person  to 
be  held  by  him  until  the  happening  of  a  certain  condition, 
when  the  title  is  to  pass  to  the  grantee  or  person  for  whom 
the  instrument  was  intended.  In  the  law  of  real  proi)city, 
and  al.so  the  law  of  personal  property  generally,  until  the 
condition  happens  or  is  performed,  no  title  is  acquired  by 
the  intended  grantee,  even  though  the  deed  or  properly  is 
delivered  to  him  pi  ior  to  such  performance  of  the  condi- 
tion ;  and  any  bona  fide  purchaser  from  the  grantee  or 
vendee  could  acquire  no  title,  which  he  could  assert  against 
the  grantor  or  vendor  in  escrow.^  In  applying  the  doc- 
trine of  escroio  to  negotiable  bills  and  notes,  the  difficulty 
is  met  with,  that  if  a  bona  fide  purchaser  where  a  bill  or 
note  is  delivered  in  escrow,  cannot  acquire  title,  which  ho 

'  See  post,  chapter  on  Bona  Fide  Holders. 

2  Drake  v.  Rogers,  32  Me.  524;  Marshall  u.  Russell,  44  N.  H.  509; 
Flanagan  v.  Meyers,  41  Ala.  132;  King  v.  Fleming,  72  111.21  (22  Am. 
Rep.  131);  Davis  v.  Barger,  57  Ind.  54.  But  it  has  been  held  that  a  note 
or  bill,  delivered  on  Sunday,  may  be  subsequently  ratified,  and  thereby 
made  a  valid  contract.  Winchell  v.  Carey,  115  Mas3.  500  (15  Am.  Rep. 
151);  Lovejoy  v.  Whipple,  18  Vt.  379  (46  Am.  Dec.  157)  ;  King  v.  Flem- 
ing, 72  111.  21  (22  Am.  Rep.  131);  Smith  v.  Case,  2  Greg.  100.  Aud  in 
any  event  the  payee  can  recover  the  consideration  paid  for  the  paper, 
Sayre  v.  Wheeler,  31  Iowa,  112. 

3  See  Tiedeman  on  Real  Prop.,  §  815;  Tiedeman  on  Sales,  §  326. 

39 


§  28  PARTS    OF   BILLS    AND   NOTES.  [CH.  II. 

could  enforce  against  the  drawer  and  acceptors  of  the  bill, 
and  against  the  maker  of  the  liote,  the  commercial  value  of 
bills  and  notes,  as  substitutes  for  money,  would  be  very 
seriously  curtailed.  Hence,  it  has  been  held  very  gen- 
erally, that,  although  delivery  of  a  bill  or  note  in  escrow 
will  not  pass  title,  before  the  performance  of  the  con- 
dition to  the  payee,  or  any  subsequent  holder  who  takes 
it  without  value  or  with  notice  of  the  unperformed  con- 
dition of  the  escrow,  a  bona  fide  holder  for  value  can  hold 
all  the  parties  liable  on  the  paper.* 

§  28.  Delivery  of  bills  and  notes  executed  in  blank. — 

Where  a  bill  or  note  is  signed  in  blank,  and  delivered  to  the 
payee  or  a  third  person,  with  the  authority  to  fill  up  the 
blanks,  no  second  delivery  is  needed ;  and  the  validity  of  the 
paper  will,  after  its  completion,  relate  back  to  the  time  of  its 
delivery  by  the  maker  or  drawer.^  Where  the  instrument  is 
a  deed,  or  any  instrument  under  seal  generally,  the  author- 
ities are  at  variance  on  the  question  of  the  necessity  of  a 
second  delivery.^  But  it  seems  that  a  coupon  bond,  having 
the  characteristics  of  negotiable  paper,  may  be  delivered 
in  blank,  to  be  completed  by  another,  without  requiring  a 
second  delivery  after  its  completion.*  And  where  a  blank 
note  is  filled  out  by  an  unauthorized  agent,  and  it  is  deliv- 
ered by  him  to  the  payee,  ratification  by  the  maker  is  a 
good  rebuttal  to  the  defense  of  want  of  authority.^ 

The  agent,  to  whom  the  blank  instrument  is  given  to  fill 

1  Benton  v.  Martin,  52  N.  Y.  570;  Black  River  Ins.  Co.  w.  N.  Y.  &c.  T. 
Co.,  73  N.  Y.  282;  Jones  v.  Shaw,  67  Mo.  667;  Fearing  v.  Clark,  16  Gray, 
74  (78  Am.  Dec.  394) ;  Foy  v.  Blackstone,  31  111.  538  (83  Am.  Dec.  246) ; 
Hutchinson  v.  Brown,  19  D.  C.  136,  But  see  contra,  Chipman  v.  Tucker, 
38  Wis.  43  (20  Am.  Rep.  1). 

2  Davidson  v.  Lanier,  4  Wall.  458;  Angle  v.  N.  W.  &c.  Ins.  Co.,  92  U. 
S.  330;  Bank  of  Pittsburg  v.  Neal,  22  How.  96;  Hensel  v.  Chicago  &c.  R. 
R.  Co.,  37  Minn.  88  (33  N.  W.  329);  Rich  v.  Starbuck,  51  Ind.  87;  Ives  v. 
Farmers'  Bank,  2  Allen,  236 ;  Snyder  v.  Van  Doran,  46  Wis.  602  (32  Am. 
Rep. 739). 

3  See  Tiedeman  Real  Prop.,  §  789. 

4  White  V.  Vermont  &c.  R.  R.  Co.,  21  How.  575. 

5  Bremner  v.  Fields  (Tex.  Civ.  App.),34  S.  W.  447. 

40 


CII.  II.]  PARTS    OF    BILLS    AND    NOTES.  ILL.  CAS. 

out,  cannot  bind  principal  by  inserting  any  unusual  clause ; 
at  least  as  against  the  immediate  payee  who  takes  the  paper 
with  knowledge  of  the  interposition  of  the  agent.  He  is 
not  even  authorized  to  add  "with  interest"  to  a  renewal 
of  a  note  in  which  interest  was  stipulated  for.^ 


ILLUSTRATIVE  CASES. 


Fuuk  V.  Babbitt,  156  111.  408  (41  N.  E.  1G6). 

Armstrongs.  Pomeroy  Nat.  Bauk,  46  Ohio  St.  512  (22  N.  E.  866). 

Browu  V.  Butchers'  aud  Drovers'  Bank,  6  Hill,  443. 

Witty  V.  Michigan  Mut.  L.  Ins.  Co.,  123  Ind.  411  (24  N.  E.  141). 

Dorsey  v.  Wolff,  142  111.  589  (32  N.  E.  496). 

Brown  v.  Jordhall,  32  Minn.  135  (19  N.  W.  650). 

Riggs  V.  Trees,  120  Ind.  402  (22  N.E.  254). 

Bill  of  Exchange   Without   Naming   Drawee  —  Form  of 
Action  and  Rights  of  Parties. 

Funk  V.  Babbitt,  150  111.  408  (41  N.  E.  166). 

Baker,  J.  This  was  assumpsit  brought  by  Erasmus  D.  Bab- 
bitt, appellee,  against  Francis  M.  Fuuk,  the  appellant,  and  one 
Ira  Lackey,  as  partners  under  the  firm  name  of  Fuuk  &  Lackey, 
The  15  special  counts  of  the  declaration  counted  upon  15 
promissory  notes  claimed  to  have  been  made  by  the  firm  to 
appellee,  and  the  declaration  also  contained  the  common  counts. 
The  firm  had  been  dissolved  a  year  or  more  prior  to  the  com- 
mencement of  the  suit.  Lackey  made  default.  Appellant  inter- 
posed four  pleas, —  nonassumpsit,  no  consideration,  that  he  did 
not  execute  the  notes,  and  denial  of  joint  liability, —  and  the  two 
latter  pleas  were  verified  by  atfidavit.  A  jury  trial  resulted  in  a 
verdict  and  judgment  in  favor  of  appellee,  and  against  both  part- 
ners of  the  late  firm,  for  $4,240.  There  was  an  affirmance  of  the 
judgment  upon  appeal  of  Funk  to  the  appellee  court,  and  he  then 
brougiit  tlie  case  here  by  this  appeal. 

It  is  claimed  that  the  circuit  court  committed  error  in  proceed- 
ing to  trial  without  issue  being  joined  upon  the  plea  of  nouas- 
sumpsit  and  those  in  denial  of  the  execution  of  the  notes  and  of 
joint  liabilit}'.  All  three  of  said  pleas  concluded  to  the  country, 
and  no  forinnl  similiter  was  added  to  either.  It  is  the  doctrine 
of  this  court  that  going  to  trial  without  formal  issue  being 
joined  on  a  i)lea  is  a  waiver  of  a  formal  joinder,  and  the  irregu- 
larity is  cured  by  the  verdict.  Anderson  v.  Jacobson,  66  111.  522  ; 
Strohm  v.  Hayes,  70  III.  41 ;  People  v.  Weber,  92  111.  288. 

»  Meise  v.  Doscher,  83  Hun,  580;  31  N.  Y.  S.  1872. 

41 


ILL.   CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.  H. 

It  is  assigned  as  error  that  the  trial  court  permitted  to  be  intro- 
duced in  evidence  six  of  tlie  written  instruments  purporting  to  be 
signed  by  the  firm  of  FLink&  Lacke}'.  Tliese  several  instruments 
were,  la  form,  substantially  like  this:  "  $350.00.  Bloomington, 
111.,  April  23,  1891.  Thirty  days  after  date,  pay  to  the  order  of 
E.  D.  Babbitt  three  hundred  and  fifty  dollars,  for  value  received. 
Funk  &  Lackey."  Said  instruments  were  declared  on  as  promis- 
sory notes.  It  is  urged  that  they  are  not  notes,  or  even  prom- 
ises to  pay,  and,  not  being  directed  to  any  one,  do  not  constitute 
drafts  or  orders,  and  in  fact  amount  to  no  more  than  blank  pieces 
of  paper.  They  are,  undoubted'}',  very  irregular  and  informal 
instruments,  but  they  are  not  void  as  written  evidence  of  indebt- 
edness. A  person  may  draw  a  bill  upon  himself,  payable  to  a 
third  pei'sou,  in  which  case  he  is  both  drawer  and  drawee.  Here 
the  firm  drew  bills,  but  did  not  address  them  to  any  third  pers(m 
or  persons,  and  it  is  therefore  to  be  regarded  that  they  were,  in 
legal  effect,  addressed  to  themselves,  as  drawees,  and  the  sig- 
natures of  the  firm  to  the  several  bills  bound  the  firm,  both  as 
drawers  and  acceptors.  The  instriunents  are  inland  bills  of 
exchange,  to  which  the  firm  sustain  the  triple  relation  of  drawers, 
drawees,  and  acceptors.  And,  as  the  declaration  contains  the 
consolidated  counts,  the  bills  were  admissible  in  evidence  under 
them.  Moreover,  the  drawers  and  drawees  being  the  same,  the 
bills  are,  in  legal  effect,  promissory  notes,  and  may  be  treated  as 
such,  or  as  bills,  at  the  holder's  option.  1  Daniel  Neg.  Inst. 
§§  128,  129. 

Complaint  is  made  that  counsel  were  permitted,  over  the 
objections  of  appellant,  to  ask  numerous  leading  questions  of 
Babbitt,  the  plaintiff  below.  On  both  sides  of  the  case  the  rule 
excluding  such  questions  on  the  direct  examination  of  witnesses 
was  rather  loosely  enforced, —  more  so  than  is  advisable.  Green- 
leaf  says  (1  Greenl.  Ev.,  §  435),  that  when  and  under  what  cir- 
cumstances a  leading  question  may  be  put  is  a  matter  resting  in 
the  sound  discretion  of  the  court,  and  not  a  matter  which  can  be 
assigned  for  error.  And  this  court  has  held  that  a  general  objec- 
tion to  a  question  will  not  reach  the  objection  of  its  being  lead- 
ing, and  that  trial  courts  must  be  allowed  to  exercise  a  large 
discretion  on  the  subject  of  leading  questions.  Farmelee  v. 
Austin,  20  111.  35;  Bank  v.  Dunbar,  118  111.  625;  9  N.  E.  18(5. 
We  do  not  understand  the  law,  as  held  in  tiiis  State,  to  be  that 
an  assignment  of  error  will  not  lie  for  permitting  leading  ques- 
tions to  be  asked  ;  but  we  do  understand  the  doctrine  to  be  tliat 
the  matter  of  allowing  such  questions  is  so  much  a  matter  within 
the  discretion  of  the  trial  court  as  that  a  judgment  will  not  be 
reversed  for  a  ruling  in  regard  thereto,  unless  it  is  manifest  that 
there  has  been  a  palpable  abuse  of  discretion,  and  also  a  sub- 
stantial injury  done.  Upon  inspection  of  the  record,  we  find  that 
in  almost  every  instance  the  objections  interposed  were  general 
objections,  and  not  placed  upon  the  ground  that  they  were  lead- 
ing. In  a  comparatively  few  instances  the  objections  were  put  upon 
42 


CH.   ir.]  PARTS    OF    BILLS    AND    NOTES.  ILL.   CAS. 

that  specific  ground.  But,  so  far  as  we  can  discover,  in  every 
such  instance  either  the  objections  were  made  after  the  questions 
had  been  answered,  and  no  motions  made  to  exclude,  or  the  ques- 
tions and  answers  were  substantially  repetitions  of  questions  and 
answers  already  in  the  record,  or  else  the  inquiries  were  in  regard 
to  minor  and  unimportant  matters.  Moreover,  Babbitt,  at  the 
time  of  his  examination,  was  over  82  years  of  age,  and  it  is 
apparent  from  the  record  that  the  infirmities  of  old  age  made  it 
difficult  to  get  his  testimony  upon  the  real  matters  involved  in 
the  controversy  without,  to  some  extent,  resorting  to  direct  and 
pointed  interrogatories.  Upon  the  whole,  we  are  unable  to  come 
to  the  conclusion  that  the  action  and  the  rulings  of  the  court  in 
the  premises  show  such  a  palpable  and  injurious  abuse  of  discre- 
tion as  to  constitute  reversible  error. 

It  is  claimed  that  the  court  erred  in  allowing  Lackey  to  testify, 
in  answer  to  leading  questions,  over  the  objections  of  appellant, 
that  the  money  he  got  of  Babbitt  "  was  used  in  firm  business." 
The  examination  was  thus :  "  Q.  What  was  done  with  the  money? 
A.  Used  to  pay  debts  of  the  firm.  (Objection  and  exception  by 
defendant's  counsel.)  Q.  Was  it  used  in  the  firm?  (Objection 
by  defendant.)  A.  Yes,  sir.  (Defendant  excepted.)  The 
Court:  That  is  all  right,  as  far  as  it  goes.  (Defendant  ex- 
cepted.) Q.  Was  that  money  used  in  the  firm  business?  (Ob- 
jection by  defendant,  as  calling  for  conclusion.)  A.  Yes,  sir. 
The  Court :  I  suppose  it  is  a  matter  of  fact,  whether  it  was  that 
way  or  not.  He  may  answer  that.  (Defendant  excepted.") 
We  think  that,  from  the  standpoint  of  the  views  already  expressed, 
this  claim  of  error  is  not  well  made. 

The  15  notes  in  suit — the  first  bearing  date  December  13, 
1890,  the  last  bearing  date  May  27,  1891,  and  the  others  bearing 
intermediate  dates  —  were  executed  by  Lackey,  in  the  name  of 
the  firm,  for  moneys  borrowed  of  appellee  at  said  several  times. 
The  moneys  were  delivered  in  the  form  of  checks  on  the  People's 
Bank  of  Bloomington,  signed  by  Babbitt,  and  paj'able  to  Funk  & 
Lackey  or  bearer.  Appellant  and  Lackey  were,  and  for  many 
years  had  been,  partners  in  the  retail  drug  business  at  Blooming- 
ton,  under  the  firm  name  of  Funk  &  Lackey.  Lackey  had  the 
principal  care  and  management  of  the  business.  Funk  giving  it 
but  little  personal  attention.  At  the  trial  the  theory  of  plaintiff 
below  (appellee  here)  was  that  he  had  loaned  his  money  to  the 
firm,  and  had  taken  the  firm  notes  therefor,  the  money  being 
delivered  to,  and  the  notes  signed  by  Lackey,  one  of  the  partners, 
acting  in  behalf  of,  and  as  the  agent  of  the  firm.  The  tlieory  of 
the  defendant  was  that  Lackey  had  borrowed  the  money  as  an 
individual,  and  for  his  own  personal  use,  under  an  agreement  to 
give  the  firm  notes  as  security  therefor,  and  that  appellee  had 
cognizance  of  these  facts  at  the  time  of  the  transactions.  There 
was  evidence  tending  to  prove  each  of  these  theories  of  the  case. 
The  instructions  tliat  were  given  on  motion  of  appellee  are  not 
challenged.     Appellant  tendered  to  the  court  an  instruction  which 

43 


ILL.   CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.   II. 

read  as  follows:  "  (4)  The  court  instructs  the  jury  that  although 
they  may  believe  from  the  evidence  that  the  plaintiff  loaned  the 
money  to  the  amount  of  the  notes  offered  in  evidence,  and  took 
such  notes  thereof,  yet  if  the  jury  further  believe  from  the  evi- 
dence that  such  money  was  in  fact  borrowed  for  the  use  of  Lackey, 
and  not  of  the  firm,  and  that  the  i)laintiff  knew  such  fact,  if  it  be 
a  fact,  or  if  the  jury  believe  that  the  plaintiff  knew,  or  had  notice, 
that  Lacke}'^  had  no  power  so  to  bind  the  firm,  or  that  the  money, 
if  an}^,  was  not  in  good  faith  loaned  to  the  firm,  then  in  either  of 
such  cases  the  jury  should  find  the  issues  for  the  defendant." 
The  court  did  not  give  said  instruction,  as  asked,  but  modified  it 
by  adding  thereto,  at  its  end,  the  following  w'ords:  "  Unless  the 
plaintiff  has  proven  by  preponderance  of  the  evidence  that  the 
firm  of  Funk  &  Lackey  did  in  fact  receive  and  use  the  money  of 
the  plaintiff."  And  the  court  then  gave  the  instruction,  as  modi- 
fied, to  the  jury.  And  the  court  made  a  like  modification  to  three 
others  of  the  instructions  submitted  by  appellant,  before  giving 
them  to  the  jury.  But  the  court  also  gave  to  the  jury,  at  the 
instance  and  upon  the  motion  of  appellant,  two  other  instructions, 
which  read  as  follows:  "  (1)  The  court  instructs  the  jury  that  if 
the  plaintiff  has  failed  to  prove  by  a  preponderance  of  the  evidence 
that  Funk  &  Lackey  received  mone}^,  and  if  the  jury  further 
believe  from  the  evidence  that  the  money  was  loaned  to  Ira  Lackey 
personally,  then  in  such  case  the  jury  should  find  a  verdict  for 
the  defendant  Funk.  And  that  should  be  the  verdict  of  the  jury, 
although  it  may  appear  from  the  evidence  that  Jra  Lackey,  at 
each  of  the  times  of  making  the  several  loans,  as  security  there- 
for, gave  to  the  plaintiff  a  note  signed  *  Funk  &  Lackey.'" 
"  (8)  The  court  instructs  the  jury  that,  before  the  plaintiff  can 
recover  in  the  case,  he  must  prove  by  preponderance  of  the  evi- 
dence either  one  or  both  of  the  following:  First,  that  the  firm 
of  Funk  &  Lackey  actually  received  his  money ;  second,  that  he 
actually  loaned  it  in  good  faith  to  the  firm  of  Funk  &  Lacke}',  and 
in  good  faith  to  receive  their  note  therefor, —  the  law  being  that 
if  the  money  was  not  received  by  the  firm,  and  the  money  was 
loaned  to  Ira  Lackey  personally,  then  tlie  plaintiff  cannot 
recover,  although  at  the  time  of  making  such  loans  the  plaintiff, 
as  security  for  his  loans,  took  from  Ira  Lackey  a  note  or 
notes  signed  by  Funk  &  Lackey."  The  modifications  made 
by  the  court  to  instructions  4,  2,  5,  and  7  did  not  correctly 
state  the  law.  One  partner  has  power  to  borrow  money  for 
^partnership  purposes,  and  give  the  notes  of  the  firm  therefor. 
Walsh  V.  Lenuon,  98  111.  27.  But  he  cannot  bind  the  firm  of 
which  he  is  a  member  by  giving  the  firm  note  in  satisfaction  of, 
or  as  security  for,  his  personal  indebtedness.  Wittram  v.  Van 
Wormer,  44  111.  525;  Wright  v.  Brosseau,  73  111.  38L  And  in 
Watt  V.  Kirb}^  15  111.  200,  this  court  said  that  where  the  credit  is 
originally  given  to  one  partner  the  creditor  cannot  hold  the  other 
partners  liable,  although  they  may  receive  the  benefit  of  the 
transaction ;  that  the  debt,  being  separate  in  its  inception,  does 

44 


CH.   II.]  PARTS    OF    BILLS    AND    NOTES.  ILL.   CAS. 

not  become  joint  by  the  subsequent  application  of  the  funds  to 
the  purposes  of  the  partnership.  We  think,  however,  that, 
although  the  modification  made  by  the  court  misstated  the  law, 
yet  that  it  did  not  constitute  reversible  error.  This  court  has 
decided  in  numerous  cases  that  a  party  cannot  assign  for  error 
a  ruling  made  at  liis  own  instance,  and  has  no  right  to  complain 
of  an  error  in  an  instruction  when  like  error  appears  in  an  in- 
struction given  at  his  request.  Coal  Co.  v.  Haenni,  146  111.  614; 
35  N.  E.  162,  and  cases  there  cited.  Here  it  was  not  at  the 
instance  of  appellee  (hat  an  unsound  proposition  of  law  was  incor- 
porated in  the  instructions,  but  it  was  on  the  motion  of  appellant 
himself  that  it  was  brought  into  the  case.  That  which  the  court 
thereafter  did  of  its  own  motion  was  simply  to  harmonize  the 
instructions  tendered  by  appellant.  Appellant  makes  quite  a 
plausible  argument  for  the  purpose  of  showing  that  the  language 
in  tlie  instructions  given  at  his  instance,  i.  e.,  "  that  the  firm  of 
Funk  &  Lackey  actually  received  the  mone}',"  and  "  that  Funk 
&  Lackey  received  the  monc}',"  have  reference  only  to  the  orig- 
inal reception  of  the  money  from  Babbitt  at  the  time  of  the  loans  ; 
whereas  the  language  of  the  modifications  made  by  the  court,  i.  e., 
"  that  the  firm  of  Funk  &  Lackey  did  in  fact  receive  and  use 
the  money,"  are  broader,  and  include,  not  only  the  case  of  an 
original  reception  of  the  money  by  the  firm  from  Babbitt,  but 
also  the  case  of  a  receiving  by  the  firm  from  Lackey  subsequent 
to  an  original  reception  of  the  same  from  Babbitt  by  Lacke}', 
acting  in  his  individual  capacity,  and  not  as  agent  of  the  firm. 
The  state  of  the  case  was  this :  The  testimony  introduced  by 
appellee  tended  to  prove,  among  other  things,  that  the  mone}' 
borrowed  from  Babbitt,  althougli  not  entered  on  the  firm  l)ooks, 
was  actually  used  for  firm  purposes, —  in  paying  firm  indebted- 
ness, etc., —  while  the  testimony  introduced  by  appellant  tended 
to  prove,  inter  alia,  that  the  borrowed  money  could  not  be  traced 
on  the  books,  or  to  any  use  for  firm  purposes,  and  that  it  was 
appropriated  to  the  personal  and  individual  use  of  Lackey.  It 
is  to  be  noted  that  the  instructions  proffered  by  appellant  did 
not  use  any  such  expressions  as  "  actually  received  the  monej'  in 
the  first  instance,"  or  "original  reception  of  the  money  from 
Babbitt,"  or  "subsequent  reception  of  the  money  by  the  firm 
from  Lackey."  They  simply  called  the  attention  of  the  jury  to 
this  question,  —  whether  or  not  there  had  been  an  actual  recep- 
tion of  the  money  by  the  firm, —  and  left  it  wholly  a  matter  of 
indifference  whether  such  receiving  of  the  money  by  the  firm  was 
from  Babbitt,  and  at  the  time  of  tiie  loans,  or  subsequent  to  the 
original  loans,  and  from  Lackej'.  The  office  of  an  instruction  is 
to  give  knowledge  and  information  to  the  jur}-,  for  immediate 
application  to  the  subject-matter  before  them.  The  test,  then, 
is,  not  what  the  ingenuity  of  counsel  can,  at  leisure,  work  out 
the  instructions  to  mean,  but  how  and  in  wliat  sense,  under  the 
evidence  before  them,  and  tlie  circumstances  of  the  trial,  would 
ordinary  men  and  jurors  understand  the  instructions.     We  think 

45 


ILL.   CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.   II. 

that  in  the  light  of  the  testimony  above  referred  to  the  jury,  when 
they  were  told  in  the  instructions  given  at  the  request  of  appel- 
lant that  they  should  pass  upon  the  questions  ' '  whether  the  firm 
of  Funk  &  Lackey  actually  received  the  money,"  and  whether 
' '  Funk  &  Lackey  received  the  money, ' ' —  their  attention  not  beiug 
called  to  either  the  inquiry  as  to  when  it  was  received,  whether  at 
the  time  of  the  loan  or  thereafter,  or  to  the  inquiry  whether  it  was 
received  from  Babbitt  or  from  Lackey, —  would  understand  that  it 
was  immaterial  from  whom,  or  at  what  time,  the  money  was  received, 
provided  only  that  the  result  was  that  the  firm  got  tlie  money  and 
the  benefit  thereof.  We  find  no  error  in  the  record  for  which  tlie 
judgment  should  be  reversed.  The  judgment  of  the  appellate 
court  is  affirmed.     Affirmed. 


Fictitious  Payee  —  Effect  on  Rights  of  Holder. 

Armstrong  v.  Pomeroy  Nat.  Bank,  4G  Ohio  St.  612  (22  N.  E.  8C6). 

MiNSHALL,  C.  J.  The  original  action  was  a  suit  by  Kate  S.  D. 
Armstrong  against  the  Pomeroy  National  Bank,  to  recover  of  the 
bank  the  sum  of  $450,  due  her  upon  a  deposit  she  had  made  with 
the  bank.  She  averred  that  she  had  given  a  check,  payable  to 
one  William  Brown  or  order,  that  had  been  procured  from  her 
by  the  fraudulent  practices  of  one  Grimes,  who  represented  him- 
self as  acting  for  the  said  Brown  in  the  negotiation  of  a  note  ; 
that  there  was  no  such  person  as  Brown,  and  that  the  note  was 
fraudulent,  of  all  which  she  was  ignorant  at  the  time  ;  that  Grimes 
afterwards  indorsed  the  check  ''William  Brown,"  and,  adding 
his  own  indorsement,  presented  it  to  the  bank,  who  paid  it.  The 
principal  ground  of  defense  was  that  plaintiff  was  negligent  in 
delivering  the  check  to  Grimes,  and  that  it  used  ordinary  care  in 
paying  it  to  Grimes,  indorsed  as  it  was.  The  case  was  tried  to 
the  court,  who,  upon  the  request  of  the  parties,  found  its  conclu- 
sions of  law  and  fact  separately,  as  follows : — 

"  FINDINGS    OF    FACTS. 

"  (1)  That  the  defendant  is  a  banking  corporation,  organized 
under  the  laws  of  the  United  States.  (2)  That  on  August  31, 
A.  D.  1882,  plaintiff  had  on  deposit  with  defendant,  subject  to 
be  drawn  out  by  her  check,  a  sum  of  money  greater  than  the 
amount  of  the  check  hereinafter  to  be  described.  (3)  That  on 
said  31st  day  of  August,  A.  D.  1882,  one  J,  S.  Grimes,  by  a 
fraud  practiced  upon  plaintiff,  by  negotiating  to  her,  as  the  pre- 
tended agent  of  one  William  Brown,  a  fictitious  person,  a  forged 
promissory  note  negotiable  in  form,  induced  her  to  draw  and  de- 
liver to  him,  as  pretended  agent  of  said  Brown,  the  following 
check:  '  Pomeroy,  O.,  August  31,  1882.  Pomeroy  National 
Bank,  pay  to  William  Brown  or  order,  four  hundred  and  fifty 
dollars  ($450).  [Signed]  K.  S.  D.  Armstrong."^  (4)  That 
there  was  no   such  person  as  the  above-named  William  Brown ; 

46 


CH,   II.]  TARTS    OF    BILLS    AND    NOTES.  ILL.   CAS. 

that  plaintiff  supposed  (at  tlie  time)  there  was,  and  believed  she 
delivered  the  check  to  said  Brown,  through  his  agent,  said 
Grimes.  (5)  That  she  was  not  careless  or  negligent  respecting 
the  transaction,  but,  instead,  was  ordinarily  careful  and  prudent 
in  respect  thereof.  (6)  That  said  Grimes  on  the  same  day 
(August  31,  1882),  wrote  the  name  'William  Brown'  across 
the  back  of  said  check,  and  presented  it  to  defendant  for  pay- 
ment; that  defendant  having  no  knowledge  respecting  the  way 
Grimes  had  obtained  it,  or  that  the  name  '  William  Brown  ' 
was  the  name  of  a  fictitious  person,  paid  the  same,  and  charged 
the  amount  thereof  against  the  account  of  the  plaintiff.  (7)  That 
defendant  in  paying  the  check  to  Grimes  made  the  usual  inquiries 
respecting  his  identity,  and  in  other  respects  was  ordinarily  care- 
ful and  prudent  in  relation  to  the  transaction.  (8)  That  plain- 
tiff before  the  commencement  of  this  action  demanded  of  defend- 
ant the  payment  of  said  sum  by  it  paid  to  said  Grimes,  which 
defendant  then  refused,  and  has  not,  either  before  or  since  said 
demand,  paid  the  same,  or  any  part  thereof. 

' '  CONCLUSION  OF  LAW. 

"  That  the  payment  of  the  check  by  defendant  to  said  Grimes 
was  not  (by  the  fncts  above  found)  authorized  by  said  plaintiff, 
and  could  not  legally  be  made  a  charge  against  her  in  the  account 
between  her  and  the  defendant  respecting  the  money  she  had  on 
deposit  with  it,  and  that  the  amount  named  in  the  check,  together 
with  interest  thereon  at  the  rate  of  six  per  cent  from  the  day  she 
made  the  demand  above  found  to  have  been  made,  for  its  pay- 
ment to  her,  is  due  and  payable  from  defendant  to  her." 

A  motion  for  a  new  trial  having  been  made  and  overruled, 
judgment  was  entered  for  the  plaintiff  upon  the  findings.  The 
judgment  of  the  common  pleas  was  reversed  on  error  by  the  cir- 
cuit court,  and  this  proceeding  is  prosecuted  to  obtain  a  reversal 
of  the  circuit  court,  and  an  affirmance  of  the  common  pleas. 

Th's  case  is,  in  its  general  features,  analogous  to  that  of  Dodge 
V.  Bank,  20  Ohio  St.  234,  and  should,  as  we  think,  be  ruled  by 
it.  There  a  paymaster  of  the  United  States,  who  kept  his  account 
at  the  bank,  drew  his  check  on  the  ]>ank  inpayment  of  an  indebt- 
edness of  the  United  States  to  Frederick  B.  Dodge,  and  delivered 
it  to  the  person  who  presented  the  certificate,  he  representing 
himself  to  be  Dodge.  This  representation  Was  false,  and  the 
person  making  it  was  a  thief.  Being  a  stranger  to  the  paymaster, 
he  at  first  refused  to  pay  the  claim  to  him,  but  on  his  assuring 
him  that  he  could  identify  himself  at  the  bank,  the  paymaster 
drew  the  check,  payable  to  Dodge  or  order,  and  delivered  it  to 
the  person  j^resenling  the  certificate.  The  amount  of  the  check 
was  paid  him  by  the  bank  on  his  representing  himself  to  be 
Dodge,  and  indorsing  the  check  in  that  name.  The  bank  had  no 
knowledge  of  what  had  transpired  jirior  to  the  presentation  of  the 
check  for  payment,  and  siip[)Osed  it  was  paying  it  to  the  right 
person.     In  deciding  the  case,  the  court  laid  down  the  following 

47 


ILL.   CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.   II. 

principles:  (1)  The  duty  of  a  banker  is  to  pay  the  checks  and 
bills  of  his  customer,  drawn  payable  to  order,  to  the  person  who 
becomes  holder  by  a  genuine  indorsement ;  and  he  cannot  charge 
him  with  payments  made  otherwise,  unless  the  circumstances 
amount  to  a  direction  from  the  customer  to  the  banker  to  pay  the 
paper  without  reference  to  the  genuineness  of  the  indorsements, 
or  are  equivalent  to  a  subsequent  admission  that  the  indorsement 
is  genuine,  in  reliance  on  which  the  banker  is  induced  to  alter  his 
position.  (2)  When  thei-e  is  no  fraud,  or  special  understanding 
between  the  banker  and  the  customer,  the  liability  of  the  banker 
for  paying  a  check  upon  a  forged  indoi'seraent  cannot  be  affected 
by  conduct  of  the  customer  in  drawing  the  check,  of  which  the 
banker  had  no  notice.  The  case  was  again  brought  to  this  court 
upon  a  question  of  evidence,  and  was  assigned  to  and  disposed  of 
by  the  first  commission,  which,  after  a  full  and  careful  re-exam- 
ination, approved  and  followed  the  former  decision ;  and  the 
principles  announced  in  the  case,  after  such  careful  considera- 
tion, must  determine  this  one. 

By  the  fraud  of  one  Grimes  the  plaintiff  was  induced  to  pur- 
chase a  note  that  had  no  real  existence  as  a  security.  She  is 
found  by  the  court  to  have  been  ordinarily  careful  and  prudent  in 
the  transaction,  but  was  deceived.  She  supposed  that  she  was 
purchasing  a  valid  security  belonging  to  a  man,  as  represented 
by  Grimes,  by  the  name  of  William  Brown,  and  for  whom,  as  he 
represented,  he  was  acting  as  agent,  and  gave  to  the  assumed 
agent  for  Brown  a  check  for  the  amount,  payable  to  Brown  or  his 
order.  Now  it  is  evident  both  upon  reason  and  the  authority  of 
the  previous  decisions,  that  the  circumstances  under  which  the 
plaintiff  was  induced  to  give  the  check,  even  though  calculated 
to  arouse  suspicion  on  her  part,  cannot  modify  the  duty  required 
of  the  bank  in  the  matter  of  paying  or  not  paying  the  check.  It 
is  not  claimed  that  the  bank  had  any  knowledge  of  how  or  under 
what  circumstances  Grimes  had  obtained  the  check,  and  there  is 
no  finding  of  any  such  course  of  dealing  between  the  bank  and 
the  plaintiff  as  would  have  authorized  it  to  depart  from  the 
general  duty  of  a  bank  in  paying  the  checks  of  its  customers 
drawn  payable  to  a  certain  person  or  order.  It  was  its  duty  to 
pay  to  the  person  named  or  his  order,  and  to  withhold  payment 
until  it  was  satisfied,  both  as  to  the  identity  of  the  payee  and  the 
genuineness  of  his  signature.  Morse  Bank.,  §474;  Robarts  v. 
Tucker,  16  Q.  B.  560,  per  Maule,  J.,  at  p.  578.  It  is  found 
that  the  bank  made  the  usual  inquiries  respecting  the  identity  of 
Grimes,  and  in  other  respects  was  ordinarily  careful  and  prudent 
in  relation  to  the  transaction  ;  but  this  must  be  taken  in  connec- 
tion with  the  further  fact  that  Grimes  was  not  the  payee  of  the 
check,  and  that  his  indorsement,  without  the  genuine  indorsement 
of  the  payee,  could  confer  no  title  upon  the  holder  of  the  check, 
or  any  interest  in  it»  as  against  the  drawer.  "There  is  no 
doubt,"  says  Lord  Kenyon  in  Tatlock  v.  Harris,  3  Terra.  R.  181, 
"  but  that  the  indorsee  of  a  bill  of  exchange,  payable  to  order, 
48 


CH.  II.]  PARTS    OF   BILLS    AND    NOTES.  ILL.  CAS.. 

must,  in  deriving  his  title,  prove  the  handwriting  of  the  first 
indorser."  See  Mead  v.  Young,  4  Term  R.  28,  30;  2  Pars. 
Notes  &  B.  595.  Tiie  indorsement  on  the  check,  puri)orting  to 
be  that  of  the  pa^ee.  Brown,  had  been  placed  tiiere  by  Grimes, 
and  was  either  a  forgery  or  a  fraud,  and,  for  the  purposes  of  this 
case,  it  is  not  material  which  it  is  termed.  As  to  it  the  bank 
acted  upon  the  representations  of  Grimes,  and  did  not  otherwise 
know  whether  it  was  genuine  or  not.  As  said  in  Dodge  v.  Bank, 
30  Ohio  St.  1 :  "  The  rightful  possession  of  a  check  by  no  means 
carries  with  it  or  implies  a  right  to  demand  or  receive  payment  of 
it,  without  the  genuine  indorsement  of  the  person  to  whose  order 
it  is  made  payable ;  "  and  if  a  banker  accept  or  undertake  to  pay 
a  check,  "  he  must  see  to  it,  at  his  peril,  that  he  pays  according 
to  the  terms  of  the  order,  and  to  the  party  named  therein,  or 
to  one  holding  it  under  the  genuine  indorsement  of  such 
payee.  *  *  *  And  this  is  true  whether  the  defendant  exer- 
cised the  degree  of  caution  which  bankers  usually  do  in  such  cases 
or  not.  The  question  is,  was  the  check  paid  to  the  party  to 
whom,  by  its  terms,  it  was  made  payable  .'*  "  Therefore  the  court 
rightly  concluded,  as  a  question  of  law  from  the  facts  found,  that 
the  payment  of  the  check  by  the  defendant  was  not  authorized  by 
the  plaintiff,  and  that  it  could  not  rightfully  be  charged  to  her 
account. 

The  fact  that  the  check  was  made  payable  to  a  person  who  had 
no  existence  does  not  alter  the  rights  of  the  plaintiff  as  against 
the  bank,  for  she  supposed  that  Brown  was  a  real  person,  and 
intended  that  payment  should  be  made  tosucli  person.  The  doc- 
trine that  treats  a  check  or  bill  made  payable  to  a  fictitious  per- 
son as  one  made  payable  to  bearer,  and  so  negotiable  without 
indorsement,  applies  only  where  it  is  so  drawn  with  the  knowledge 
of  the  parties.  Tatlock  v.  Harris,  3  Term  K.  174,  180;  Vere -y, 
Lewis,  Id.  182;  Minet  v.  Gibson,  Id.  481;  same  case  in  the 
house  of  lords  on  error,  Gibson  v.  Minet,  1  H.  Bl.  569 ;  CoUis 
V.  Emett,  Id.  313;  Gibson  v.  Hunter,  2  H.  Bl.  187,  The  doc- 
trine that  a  bill  payable  to  a  fictitious  person  or  order  is  equiva- 
lent to  one  payable  to  bearer  had  its  origin  in  these  cases,  which 
all  grew  out  of  bills  drawn  by  Levisay  &  Co.,  bankrupts,  payable 
to  a  fictitious  person  or  order,  and  were  accepted  by  Gibson  & 
Co. ;  but  it  will  be  noticed  that  the  holding  in  each  case  was 
upon  the  express  ground  that  the  acceptor  knew  at  the  time  of  his 
acceptance  that  the  bill  was  payable  to  a  fictitious  person,  and 
but  for  this  fact  the  fictitious  indorsement  would  have  been  held 
to  be  a  forgery, —  some  of  the  judges  expressing  a  doubt  whether 
it  was  not  so,  although  its  character  was  known  to  the  acceptor. 
3  Term  R.  181.  These  cases  will  be  found  reviewed  in  a  note  to 
Bennett  v.  Farnell,  1  Camp.  130,  It  was  held  in  this  case  that  a 
bill  made  payable  to  a  fictitious  person  or  order  is  neither  payable 
to  the  order  of  the  drawer  or  bearer,  but  is  completely  void. 
But  in  an  addendum  to  the  case,  at  i)age  180c  of  the  Report, 
Lord  EUeuborough  observes  that  this  holding  must  be  taken  with 

4  49 


ILL.  CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.   11. 

this  qualification:  "Unless  it  can  be  shown  that  the  circum- 
stance of  the  payee  being  a  fictitious  person  was  known  to  the 
acceptor."  The  rule  is  stated  with  this  qualification  in  Byles  on 
Bills,  82.  See,  also,  to  the  same  effect,  Forbes  v.  Espy,  21  Ohio 
St.  483;  1  Rand.  Com.  Paper,  §§  162-164;  2  Pars.  Notes  &  B. 
591,  and  note  a.  Mr.  Daniels,  in  his  work  on  Negotiable  Instru- 
ments (section  139),  states  the  rule  to  be  general,  but,  as  shown 
by  Mr.  Randolph,  the  cases  do  not  bear  out  the  text.  1  Rand. 
Com.  Paper,  §  164,  note  4.  And  upon  principle  we  do  not  see 
how  the  law  could  be  held  to.  be  otherwise.  For  if  the  fictitious 
character  of  the  payee  is  unknown  to  the  drawer,  whoever  indorses 
the  paper  in  that  name  with  intent  to  defraud  perpetrates  a  for- 
gery, and  the  indorsement  is  void ;  a  general  intent  to  defraud 
being  sulficieiit  to  constitute  the  offense. 

The  case  of  Lane  v.  Krekle,  22  Iowa,  399,  is  not  in  point,  for 
there  the  note  was  made  payable  to  a  fictitious  person  "  or 
bearer,"  and  passed  by  delivery  without  indorsement.  The  case 
of  Phillips  V.  Thurn,  114  E.  C.  L.  694,  cited  by  the  learned  judge, 
is  clearly  distinguishable  from  the  case  before  us.  There  the 
signature  of  the  drawer  as  well  as  the  indorsement  was  a  forgery  ; 
but  the  defendant,  the  acceptor,  was  held  liable  because  the  plain- 
tiff discounted  the  paper,  relying  in  good  faiih  upon  the  accept- 
ance of  the  defendant.  The  case  was  finally  disposed  of  on  a 
case  stated,  reported  in  L.  R.  1  C.  P.  463.  The  ground  of  the 
decision  appears  from  the  following  observations  of  Keating,  J. 
(page  472) :  "  I  think,  upon  the  facts  stated  in  this  special  case, 
that  it  was  not  competent  to  the  defendant  to  deny  the  genuine- 
ness of  this  bill.  He  knew  that  the  plaintiffs  were  willing  to 
advance  money  upon  the  bill  only  upon  his  vouching  by  his 
acceptance  of  it  the  authenticity  of  the  drawing.  His  acceptance 
amounted  to  a  representation  to  the  plaintiffs  which  enabled  the 
person  representing  Plana  to  obtain  money  from  the  plaintiffs  on 
the  bill."  The  decision  in  this  case  simply  followed  a  well-recog- 
nized principle  in  the  law  of  notes  and  bills.  It  is  thus  stated  by 
Mr.  Smith:  "  If  the  drawer's  signature  be  forged,  the  drawee,  if 
he  accepts  the  bill,  is  bound  to  pay  it,  provided  it  be  in  the  hands 
of  a  holder  bona  fide  and  for  value,  for  the  drawee's  acceptance 
admits  the  drawer's  handwriting  to  l)e  genuine."  Smith  Merc. 
Law,  151.  Now,  Mrs.  Armstrong  can  in  no  way  be  said  to  have 
afHrmed  by  any  act  of  hers  that  the  indorsement  upon  the  check 
was  genuine,  for  there  was  no  indorsement  on  it  when  it  left  her 
hands.  The  case  of  Rogers  v.  Ware,  2  Neb.  29,  cited  by  counsel 
for  defendant  in  error,  does  not  support  his  contention.  The 
case  of  Ort  v.  Fowler,  31  Kan.  478,  2  Pac.  Rep.  580,  was  rested 
upon  a  number  of  grounds ;  and,  in  so  far  as  it  may  have  been 
on  the  ground  that  a  note  made  payable  to  a  fictitious  person  or 
order  is  in  effect  payable  to  bearer,  irrespective  of  the  knowledge 
of  the  maker,  it  simply  follows  the  authority  of  1  Daniels  Neg. 
Inst.,  §  139,  which,  we  have  shown,  is  not  borne  out  by  the  cases 
relied  on. 

50 


ClI.    II.]  PARTS    OF    BILLS    AND    NOTES.  ILL.   CAS. 

If  the  drawer  of  a  check,  acting  in  good  faith,  makes  it  payable 
to  a  certain  person  or  order,  sujjposing  there  is  such  person, 
when  in  fact  there  is  none,  no  good  reason  can  l)e  perceived  why 
the  banker  should  be  excused  if  he  pay  the  check  to  a  fraudulent 
holder  upon  any  less  precautions  than  if  it  had  been  made  pay- 
able to  a  leal  person  ;  in  other  words,  why  he  should  not  be 
required  to  use  the  same  precautions  in  the  one  case  as  in  the 
other,  —  that  is,  determine  whether  the  indorsement  is  a  genuine 
one  or  not.  The  fact  that  the  payee  is  a  non-existing  person 
does  not  increase  the  liabiliiy  of  the  bank  to  be  deceived  by  the 
indorsement.  The  fact  is  that  an  ordinarily  prudent  banker 
would  be  less  liable  to  be  deceived  into  a  mistaken  payment  by  a 
fictitious  indorsement  such  as  this  was  than  by  a  simple  forgery. 
The  determination  of  the  character  of  any  indorsement  involves 
the  ascertainment  of  two  things:  (1)  The  identity  of  the 
indorser  ;  and  (2)  the  genuineness  of  his  signature  ;  and  no  careful 
banker  woukl  pay  upon  the  faith  of  the  genuineness  of  any  name 
until  he  had  fully  satisQed  himself  both  as  to  the  identity  of  the 
person  and  the  genuineness  of  his  signature.  Now,  a  careful 
bj  nker  may  be  deceived  as  to  the  signature  of  a  person  with 
whose  identity  he  may  be  familiar ;  but  he  is  less  liable  to  be 
deceived  when  both  the  signature  and  the  person  whose  signature 
it  purports  to  be  are  unknown  to  him.  In  making  the  inquiry 
required  in  such  case  to  warrant  him  in  acting,  he  will  either  learn 
that  tliere  is  no  such  person,  or  that  no  credible  information  can 
be  obtained  as  to  his  existence,  which,  with  an  ordinarily  prudent 
banker,  would  be  the  same  as  actual  knowledge  that  there  is  no 
such  person,  and  he  would  withhold  payment,  as  he  would  have 
the  right  to  do  in  such  case.  -But  still,  if  he  should  be  deceived 
as  to  the  existence  of  the  person,  he  would,  nevertheless,  require 
to  be  satisfied  as  to  the  genuineness  of  the  signature.  Of  this, 
however,  he  could  not  be  through  his  skill  in  such  matters,  and 
on  which  bankers  ordinarily  rely,  for  he  would  be  without  any 
standard  of  comparison,  and  he  could  have  no  knowledge  of  the 
handwriting  of  the  supposed  person,  for  there  is  no  such  person. 
So  that  if  he  acts  at  all  it  must  be  upon  the  confidence  he  may 
place  in  the  knowledge  of  some  other  ])erson,  and  if  he  choose  to 
act  u[)on  this,  and  make,  instead  of  witliholding,  payment,  he  acts 
at  his  peril,  and  must  sustain  whatever  loss  may  ensue.  It  is  a 
saying,  frequently  repeated  in  "  The  Doctor  and  Student,"  that 
"  he  who  loveth  peril  shall  perish  in  it."  In  other  words,  where 
a  person  has  a  safe  way,  and  abandons  it  for  one  of  uncertainty, 
he  can  l>lame  no  one  but  himself  if  he  meets  with  misfortune. 
Judgment  of  the  circuit  court  reversed,  and  that  of  the  common 
pleas  affirmed. 

51 


ILL.  CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

What  is  a  Sufficient  Signature. 

Brown  v.  The  Butchers'  aud  Drovers'  Bank,  G  Hill,  443. 

On  error  from  the  superior  court  of  the  city  of  New  York, 
where  the  Butchers'  and  Drovers'  Bank  sued  Brown  as  the 
indorser  of  a  bill  of  exchange,  and  recovered  judgment.  The  in- 
dorsement was  made  with  a  lead  pencil,  and  in  figures,  thus,  "1. 
2.  8.,"  no  name  being  written.  Evidence  was  given  strongly 
tending  to  show  that  the  figures  were  in  Brown's  handwriting,  and 
that  he  meant  they  should  bind  him  as  indorser,  though  it  also 
appeared  he  could  write.  Tiie  court  below  chai-ged  the  jury  that, 
if  they  believed  the  figures  upon  the  bill  were  made  by  Brown,  as 
a  substitute  for  his  proper  name,  intending  thereby  to  bind  him- 
self as  indorser,  he  was  liable.  Exception.  The  jury  found  a 
■verdict  for  the  plaintiffs  below,  on  which  judgment  was  rendered, 
and  Brown  thereupon  brought  error. 

Nelson,  C.  J.  It  has  been  expressly  decided  that  an  indorse- 
ment written  in  pencil  is  sufficient.  Geary  v.  Physic,  5  Barn.  & 
Cress.  234.  And  also  that  it  may  be  made  by  a  mark.  George  v. 
Surrey,  1  Mood  &  Malk.  516.  In  a  recent  case  in  the  K.  B.  it 
was  held  that  a  mark  was  a  good  signing  within  the  statute  of 
frauds.  And  the  court  refused  to  allow  an  inquiry  into  the  fact 
whether  the  party  could  write,  saying  that  would  make  no  differ- 
ence. Baker  v.  Dening,  8  Adol.  &  Ellis,  94 ;  and  see  Harrison  v. 
Harrison,  8  Ves.  186;  Addy  v.  Grix,  lb.  504. 

These  cases  fully  sustain  the  ruling  of  the  court  below.  They 
show,  I  think,  that  a  person  may  become  bound  by  any  mark  or 
designation  he  thinks  proper  to  adopt,  provided  it  be  used  as  a 
substitute  for  his  name,  and  he  intend  to  bind  himself. 

Judgment  affirmed. 


Effect  of  Blank  in  Statement  of  Amount  of  Money   in 
Body  of  Instrument. 

Witty  V.  Michigan  Mut.  L.  Ins.  Co.,  123  Ind.  411  (24  N.  E.  141). 

Berkshire,  J.  This  is  an  action  brought  by  the  appellee 
against  the  appellant  on  the  following  writing:  "$147.70. 
Indianapolis,  Ind.,  Nov.  28th,  1883.  Four  months  after  date  I 
promise  to  pay  to  the  order  of  the  Michigan  Mutual  Life  Insur- 

nnce  Company dollars,  and  five  per  cent,  attorney's  fees 

tiiereon  per  annum  from  date  until  paid,  value  received,  without 
relief  from  valuation  or  appraisement  laws  of  the  State  of 
Indiana.  The  indorsers  jointly  and  severally  waive  presentment 
for  payment,  protest  and  notice  of  protest,  and  non-payment  of 
this  note,  and  expressly  agree,  jointly  and  severally,  that  the 
holder  may  renew  or  extend  the  time  of  payment  hereof  from 
time  to  time,  and  receive  interest,  in  advance  or  otherwise,  from 
either  of  the  makers  or  indorsers  for  any  extension  so  made, 

without  releasing  them  hereon.     Negotiable  and  payable  at , 

52 


CH.   II. j  PARTS    OF    BILLS    AND    NOTES.  ILL.   CAS. 

J.  B.  Wittey.  Nov.  28th— 31— 84.  Indiana."  The  appellee  in 
its  complaint  did  not  ask  for  a  reformation  of  the  instrument,  but 
relied  on  it  as  a  promissory  note  complete  in  itself.  The  appel- 
lant answered  by  the  general  denial  only.  The  cause  was  sub- 
mitted to  the  court  at  special  term,  and  a  finding  made  for  the 
appellee.  The  appellant  filed  a  motion  for  a  new  trial,  which  the 
court  overruled,  and  he  excepted.  An  appeal  was  taken  to  gen- 
eral term,  and  upon  the  errors  assigned  the  judgment  at  special 
term  was  affirmed,  and  from  the  judgment  in  general  term  this 
appeal  is  prosecuted. 

There  is  but  one  question  presented  for  our  consideration :  Is 
the  written  instrument,  as  it  appears  in  the  record,  an  enforceable 
obhgation  ?  We  are  of  the  opinion  that  it  is ;  if  not  so,  other- 
wise, by  virtue  of  section  5501,  Rev.  St.  1881,  and  is  negotiable 
by  indorsement.  It  is  signed  by  the  appellant,  and,  when  taken 
as  an  entirety,  we  think  it  contains  a  promise  to  pay  $147.70, 
together  with  5  per  cent,  attorney's  fees.  By  the  very  terms  of 
the  instrument  the  appellant  obligates  himself  to  pay  to  the  ap- 
pellee "dollars,"  and  it  is  expressly  recited  that  the  promise 
rests  upon  a  valuable  consideration.  No  one  can  read  the  writ- 
ing without  at  once  coming  to  the  conclusion  that  the  appellant 
intended  to  obligate  himself  to  the  appellee  for  the  payment  of 
some  definite  amount  of  money,  and  that  the  appellee  understood 
that  it  was  receiving  such  an  obligation.  Though  there  may  be 
some  formnl  imperfections  in  the  written  obligation  or  contract 
which  parties  have  entered  into,  if  it  contains  matter  sufficient  to 
enable  the  court  to  ascertain  the  terms  and  conditions  of  the 
obligation  or  contract  to  which  the  parties  intended  to  bind  them- 
selves, it  is  sufficient.  In  the  language  of  Lord  Campbell  in 
Warrington  v.  Early,  2  El.  &  Bl.  763:  "  The  contract  must  be 
collected  from  the  four  corner.^  of  the  document,  and  no  part  of 
what  appears  there  is  to  be  excluded."  We  can  imagine  no  good 
reason  why  the  marginal  figures  upon  the  writing  in  question 
should  be  disregarded.  We  know,  as  a  part  of  the  commercial 
history  of  the  country,  that  the  universal  practice  has  been,  for  a 
period  so  long  that  the  memory  of  man  runneth  not  to  the  con- 
trary, to  represent  by  superscription  in  figures  upon  all  obliga- 
tions for  the  payment  of  money  the  amount  or  sum  which  is 
writ^ten  in  the  body  of  the  instrument.  The  superscription  is 
always  intended  to  represent  the  amount  found  in  the  body  of  the 
instrument,  and  not  a  different  amount.  If,  therefore,  an  obliga- 
tion is  found  where  there  is  a  promise  to  pay  "  dollars,"  but  the 
number  of  dollars  in  the  body  of  the  instrument  is  blank,  and  tlic 
margin  of  the  instrument  is  found  to  contain  a  superscription 
which  states  a  number  of  dollars,  wh}-,  in  view  of  tiie  usage  or 
custom  which  has  so  long  i)revailed,  should  the  body  of  the 
instriimout  not  be  aided  by  the  superscription  ?  We  think  in  such 
a  case  tlie  figures  found  in  the  margin  should  be  taken  as  the 
amount  which  the  obligor  intended  to  obligate  himself  to  pay,  and 
the  obligation  enforced  accordingly. 

53 


ILL.  CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

We  do  not  think  in  such  a  case  that  the  courts  would  be  justi- 
fied in  disregarding  the  evident  intention  of  the  parties,  as 
indicated  by  the  superscription  upon  the  paper,  and  in  holding  the 
instrument  void  for  uncertainty,  or  on  the  ground  that  it  is  not  a 
perfect  writing  ;  and  especially  are  we  of  the  opinion  stated  in 
view  of  the  liberal  statute  which  we  have  on  the  subject  of  promis- 
sory notes  and  other  written  obligations,  and  their  negotiation. 
Section  5501,  supra.  In  the  case  under  consideration,  the  action 
is  between  the  origmal  parties  to  the  instrument,  and  upon  it  in 
the  form  and  condition  in  which  it  was  executed  ;  and  therefore 
we  do  not  think  it  would  be  profitable  to  consider  questions  which 
might  arise  where  the  obligation  is  made  payable  at  a  bank,  the 
blank  number  of  dollars  afterwards  filled  in  by  the  payee,  and  in- 
dorsed by  him  to  an  innocent  holder  for  value  before  maturity. 
As  to  whether  the  writing  would  be  a  negotiable  instrument  in  its 
present  condition  but  for  our  statute,  we  find  some  conflict  of 
authority.  We  cite  the  following  authorities  for  and  against  the 
proposition.  For:  Ives  ?;.  Bank,  2  Allen,  236;  Sweetser  v. 
French,  13  Mete.  262;  Petty  r.  Fleishel,  31  Tex.  169;  Corgan -y. 
Frew,  39  111.  31;  Williamson  v.  Smith,  1  Cold.  1.  Against: 
Bankv.  Hyde,  13  Conn.  279;  Edw.  Bills,  168;  Hollen  v.  Davis, 
59  Iowa,  444  ;  13  N.  W.  Rep.  413  ;  44  Amer.  Rep.  688,  with  note. 

We  find  no  error  in  the  record.    Ju'lgment  affirmed,  with  costs. 


Unconditional  Written  Promise  or  Order  to  Pay  a  Cer- 
tain Sum  of  Money. 

Hasbrook  v.  Palmer  (Circuit  Court  of  the  United  States,  1839),  2  Mc- 
Lean, 10. 

Opinion  of  the  Codrt.  This  action  is  brought  by  the  plain- 
tiffs as  assignees  on  a  promissory  note,  payable  at  New  York,  in 
New  York  funds  or  their  equivalent.  The  defendants  demur 
specially,  and  for  cause  of  demurrer  state  that  it  is  not  averred 
in  said  declaration  of  what  value  the  said  New  York  funds  or  their 
equivalent  in  the  declaration  were  at  the  time  and  place  of  pay- 
ment, and  that  said  note  is  not  negotiable. 

The  Michigan  statute  in  regard  to  the  negotiability  of  promis- 
sory notes  is  similar  to  the  Statute  of  Anne,  which  has  been  gen- 
erally adopted  in  this  countrj'.  And  the  principal  question  under 
this  demurrer  is,  whether  the  note  on  which  this  action  is  brought, 
being  payable  in  New  York  funds  or  their  equivalent,  is  nego- 
tiable. 

The  plaintiffs  rely  on  the  decision  in  the  case  of  Keith  v.  Jones, 
9  John.  Rep.  120,  where  it  was  held  that  a  note  payable  to  A.,  or 
bearer,  in  "New  York  State  bills  or  specie,"  was  negotiable 
within  the  statute,  upon  the  ground  that  the  bills  mentioned 
meant  bank  paper,  whicli,  in  conformity  with  general  usage  and 
understar.ding,  are  regarded  as  cash;  and,  tlierefore,  that  the 
meaning  was  the  same  as  if  payable  in  lawful  current  money  of 

54 


CH.  II.]  PARTS    OF   BILLS    AND   NOTES.  ILL.  CAS. 

the  State.  And  also  on  the  case  of  Jiulah  v.  Harris,  19  John. 
Rep.  144,  where  it  was  decided  that  a  promissory  note,  payable 
at  a  particular  place,  in  the  banknotes  current  in  the  city  of  New 
York,  was  negotiable  within  the  statute. 

And  it  is  insisted  that  the  promise  to  pay  in  New  York  funds, 
or  their  equivalent,  is  equivalent  to  an  undertaking  to  pay  in  law- 
ful current  money  of  the  State  of  New  York.  'J'hatit  is  generally 
understood  that  New  York  funds  means  specie,  or  a  currency 
equal  to  specie,  and  that  the  drawer  of  the  note  promises,  sub- 
stantially, to  pay  in  current  New  York  money. 

In  support  of  the  demurrer  it  is  contended  that  to  be  negotiable 
a  note  must  be  for  the  payment  of  money  only,  and  this  is  laid 
down  in  Chitty  on  Bills  (ed.  1839),  152.  He  says  it  is  the  first 
and  principal  requisite,  and  is  established  by  foreign  as  well  as 
English  law,  that  a  bill  or  note  must  be  for  the  payment  of  money 
only.  That  it  cannot  be  for  the  delivery  or  payment  of  mer- 
chandise, or  other  things  in  their  nature  susceptible  of  deteriora- 
tion and  loss  and  variation  in  value  ;  nor  can  it  be  for  payment  in 
good  East  India  bonds  or  for  the  payment  of  money  by  a  bill  or 
note.     Clarke  v.  Percival,  2  Bar.  &  Adol.  660 ;  Bui.  N.  P.  272. 

A  promissory  note  not  payable  in  cash  or  specific  articles  is 
not  negotiable.  Matthews  v.  Haughtou,  2  Fairf.  377  ;  Johusou 
V.  Laird,  3  Blackf.  Rep.  153. 

A  note  pa3'able  to  A.  B.,  or  order,  in  good  merchantable 
whisky,  at  trade  price,  cannot  be  sued  by  an  assignee  or  bearer 
in  his  own  name.     Rhodes  v.  Lindley,  Ohio  Rep.  condensed,  465. 

A  note  for  a  certain  sum,  payable  to  A.  or  order,  "  in  foreign 
bills"  (meaning  thereby  bills  of  country  banks),  has  been  held 
not  to  be  a  good  promissory  note  within  the  statute,  and  conse- 
quently not  negotiable.  Jones  v.  Sales,  4  Mass.  Rep.  245.  In 
the  case  of  Lieber  and  Colsiu  v.  Goodrich,  5  Cowen  Rep.  186, 
the  court  held  a  note  payable  in  Pennsylvania  or  New  York  paper 
currency  is  not  a  promissory  note  for  the  payment  of  money  within 
the  statute.  And  in  the  case  of  McCoriuick  v.  Trotter,  10  Serg. 
&  Raw.  Rep.  94,  the  court  decided  that  a  promissory  note  payable 
to  A.  B.,  or  order,  for  five  hundred  dollars,  in  notes  of  the  char- 
tered banks  in  Pennsylvania,  was  not  a  negotiable  note  on  which 
the  indorsee  can  sue  in  his  own  name. 

In  South  Carolina  it  has  been  decided  that  paper  medium  is  not 
money ;  and  that,  therefore,  a  note  pa3'able  in  paper  medium  is 
not  assignable  within  the  Statute  of  Anne  and  their  Act;  and  on 
a  verdict  for  the  assignee  of  such  a  note  judgment  was  arrested  : 
Larger.  Kohne,  1  McCord,  115;  IMcElarin  v.  Nesbit,  2  Nott  & 
McCordRep.  619. 

The  cases  cited  in  the  9th  and  19th  of  John.  Rep.  seem  not  to 
be  sustained  by  the  current  of  decisions  in  this  country  and  in 
England  ;  and  it  is  diUicult  to  distinguish  those  cases  from  the 
decisions  cited  so  as  to  maintain  their  consistency.  If  this,  indeed, 
were  practicable,  it  is  not  necessary  to  the  decision  of  the  question 
raised  by  this  demurrer. 

55 


ILL.   CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.   11. 

What  is  imderstood  in  this  State  by  New  York  funds  or  their 
equivalent,  may  be  a  matter  of  doubt ;  nor  does  it  seem  to  be  of  a 
nature  which  can  be  resolved  by  evidence,  so  far  as  regards  the 
question  under  consideration. 

The  term  New  York  funds,  it  is  presumed,  may  embrace  stocks, 
bank  notes,  specie,  and  every  description  of  currency  which  is 
used  in  commercial  transactions.  But  whether  is  meant  the  funds 
of  the  State  generally  or  of  the  city  of  New  York  is  not  clear. 
The  presumption  is  in  favor  of  the  latter,  but  this  is  by  no  means 
certain.  In  this  respect,  as  well  as  what  constitutes  New  York 
funds,  the  face  of  the  note  is  indefinite.  It  is,  indeed,  susceptible 
of  different  interpretations,  and  for  this  reason  it  cannot  be  con- 
sidered a  negotiable  instrument  within  the  statute.  It  is  not  a 
note,  in  the  language  of  the  decisions,  payable  in  money.  It  is 
pa3'able  in  New  York  funds  or  their  equivalent. 

Now  what  is  equivalent  to  New  York  funds?  The  answer  is 
their  value,  their  value  in  specie  or  in  current  paper  which  passes 
at  a  discount.  Might  not  the  drawer  pay  this  note  in  this  descrip- 
tion of  paper,  making  up  the  discount?  Would  not  this,  in  the 
language  of  the  contract,  be  equivalent  to  New  York  funds?  It 
would  be  equivalent  if  of  equal  value. 

The  demurrer  must  be  sustained. 


Stipulation   for   Attorney's    Fee    does   not    Destroy 
Negotiiibility. 

Dorsey  v.  Wolff,  142  111.  589  (32  N.  E.  495). 

Magruder,  J.  This  is  an  action  of  assu)npsit  begun  in  the 
circuit  court  of  Macoupin  county  on  May  16,  1889,  by  Marcus  A. 
Wolff  against  the  appellant,  Dorsey,  to  recover,  as  attorney's 
fees,  the  sum  of  10  per  cent  upon  the  amount  found  to  be  due 
upon  the  pi'omissory  notes  hereinafter  meniioned,  in  a  suit  there- 
tofore brought  upon  said  notes.  The  defendant  demurred  to  the 
declaration.  The  demurrer  was  overruled.  The  defendant  ex- 
cepted to  the  order  overruling  the  demurrer,  and  elected  to  stand 
by  his  demurrer.  Thereupon  plaintiff's  damages  were  assessed 
at  $1,619,  and  judgment  was  rendered  in  his  favor  for  that 
amount.  The  judgment  has  been  affirmed  by  the  appellate  court, 
from  which  latter  court  the  case  is  brought  here  by  appeal. 

The  declaration  sets  up  three  notes,  executed  by  the  defendant, 
William  M.  Dorsey,  dated  December  31,  1885,  payable  to  the 
order  of  George  W.  Belt,  at  the  banking  house  of  Belt  Bros.  & 
Co.,  in  Bunker  Hill,  III., —  the  first  for  §13,586  84,  on  or  before 
two  years  after  date;  the  second  for  $543.47,  on  or  before 
eighteen  months  after  date ;  and  the  third  for  $543.47,  on  or 
before  two  years  after  date, —  each  of  which  notes,  after  the  maker 
promises  for  value  received  to  pay  the  amount  therein  named  to 
the  order  of  said  Belt,  contains  the  following  words:  "  With  eight 
per  cent  interest  per  annum  after  maturity,  and,  if  not  paid  when 

56 


CH.  II.]  PARTS    OF   BILLS    AND    NOTES.  ILL.  CAS. 

due  and  suit  is  brought  thereou,  tiien  we  promise  o  pay  ten  per 
ceut  on  the  amount  due  hereon  in  addition  as  an  attorney's  fee, 
and  to  be  recovered  as  part  of  this  note,  or  by  separate  suit." 
By  the  terms  of  each  note,  also,  the  makers  and  indorsees  waive 
presentment  for  payment,  protest,  and  notice,  etc.  The  declara- 
tion then  avers  that  Dorsey  delivered  said  notes  to  Belt,  and  Belt 
indorsed  the  same  to  plaintiff,  etc.  ;  that  said  notes  were  not  paid 
when  due ;  that  suit  was  brought  thereou  ;  that  the  said  10  per 
cent  was  not  [)aid  before  or  after  said  suit  was  l)rought,  and  was 
not  recovered  in  said  suit  so  brought  upon  said  notes  as  a  part 
thereof,  etc.  One  of  the  counts,  in  addition  to  the  foregoing 
averments,  alleges  that,  after  the  maturity  of  the  notes,  they  were 
placed  in  the  hands  of  an  attorney  for  suit ;  that  suit  was  brought 
thereon,  and,  the  10  per  cent  attorney's  fee  not  having  been  re- 
covered therein,  the  plaintiff,  before  the  bringing  of  the  present 
suit,  paid  his  attorney  for  his  services  in  said  former  suit  the  said 
sum  of  §1,619.20. 

The  main  question  presented  by  the  assignments  of  error  is 
whether  or  not  the  notes  described  in  the  declaration  are  negoti- 
able instruments.  It  is  claimed  by  the  a[)pellant  that  the  notes 
are  made  non-negotialjle  by  the  insertion  therein  of  the  written 
promise  of  the  maker  that,  if  they  were  not  paid  when  due  and 
suit  was  ])rought  thereon,  he  would  pay  10  per  cent  on  the 
amount  due  thereon  in  addition,  as  an  attorney's  fee,  and  to  be 
recovered  as  a  part  of  the  notes,  or  by  separate  suit ;  that  the  in- 
dorsements b\'  the  payee  did  not  confer  the  right  upon  the  indor- 
see to  bring  suit  in  his  own  name  upon  the  notes  ;  that,  even  if 
such  indorsements  §hould  be  held  to  have  conferred  upon  the 
assignee  the  right  to  bring  suit  upon  the  notes  in  his  own  name, 
it  did  not  confer  upon  such  assignee  the  riglit  to  bring  a  separate 
suit  upon  the  stipulations  or  promises  as  to  the  attorney's  fees. 

Various  definitions  have  been  given  of  a  "  promissory  note." 
In  general  terms,  it  may  be  defined  to  be  a  written  promise  by 
one  person  to  pay  to  another  person  therein  named  or  order  a 
fixed  sum  of  money,  at  all  events,  and  at  a  time  specified  therein, 
or  at  a  time  winch  must  ceriainly  arrive.  Lowe  v.  Bliss,  24  111. 
168;  Chicago  Ry.  Equipment  Co.  v.  Merchants'  Bank,  136  U.  S. 
268 ;  10  Sup.  Ct.  Rep.  999  ;  Story  Prom.  Notes,  p.  2  ;  3  Kent 
Comm.  74: ;  2  Amer.  &  Eng.  Enc.  Law,  p.  314.  A  note  is  none 
the  less  negotiable  because  it  is  made  payable  on  or  before  a 
named  date.  Chicago  R^'.  Equipment  Co.  v.  Merchants'  Bank, 
supra;  Cisne  v.  Cliidester,  85  111.  523  ;  Ernst  v.  Steckman,  74  Pa. 
St.  13.  An  instrument  for  a  specified  sum  of  money,  and  also 
for  the  payment  of  something  else,  the  value  of  which  is  not  ascer- 
tained, but  depends  upon  extrinsic  evidence,  is  not  a  note.  Lpwe 
V.  Bliss,  supra.  A  note  which  provides  for  the  payment,  after  the 
maturity  tliereof,  of  a  certain  rate  of  interest  per  annum,  not  ex- 
ceeding the  legal  rate,  is  not  made  conditional  by  such  provision. 
Houghton  V.  Francis,  29  111.  244;  Reeves  v.  Stipp,  91  111.  G09  ; 
Laird  v.  Warren,  92  111.  204. 

57 


ILL.  CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.  II. 

Applying  these  definitions  to  the  notes  mentioned  in  the  decla- 
ration in  tliis  case,  we  find  that  each  note  is  "  a  note  for  a  sura 
certain,  payable  at  a  fixed  date."  Dietrich  v.  Bayhi,  23  La.  Ann. 
767.  The  notes  are  not  payable  on  a  contingency,  because  the 
maker  has  the  option  of  paying  on  or  before  a  certain  date  ;  nor 
are  they  conditional  instruments  because  they  contain  the  words, 
"with  eight  per  cent  interest  per  annum  after  maturity."  The 
portion  of  each  note  which  j)recedes  the  stipulation  or  promise  as 
to  the  attorney's  fee  is  in  itself  a  complete  promissor}'  note.  For 
example,  the  part  of  the  first  note  that  goes  before  the  provision 
for  the  fee  is  as  follows:  "  $13,586.84.  Bunker  Hill,  Ills.,  Dec. 
81st,  1885.  On  or  before  two  years  after  date,  for  value  received, 
we  or  either  of  us  promise  to  pay  to  the  order  of  George  W.  Belt, 
thirteen  thousand  five  hundred  eighty-six  and  84-100  dollars,  pay- 
able at  the  banking  house  of  Belt  Bros.  &  Co.,  in  Bunker  Hill, 
Illinois,  with  eight  per  cent  intercut  per  annum  after  maturity," 
etc.  "  Here  the  svim,  time  of  p  lyment,  and  payee  are  certain, 
and  these  are  the  esseut'al  characteristics  of  a  promissory  note." 
Houghton  V.  Francis,  supra.  The  promise  to  pay  the  attorney's 
fee  is  a  promise  to  do  something  after  the  note  matures.  It  does 
not  affect  the  character  of  the  note  before  or  up  to  the  time  of  its 
maturity,  either  as  to  certainty  in  the  amount  to  be  paid,  or  fixed- 
ness in  the  date  of  payment,  or  dt-finiteness  in  the  description  of 
the  person  to  whom  the  payment  is  to  be  made.  The  stipulation 
or  promise  as  to  the  attorney's  fee  cannot,  therefore,  affect  the 
negotiability  of  the  note,  because  the  negotiability  of  a  promis- 
sory note  is,  for  all  practical  purposes,  at  an  end  when  it  matures. 
Parties  taking  it  after  its  maturity  cannot  claim  to  be  innocent 
holders  without  notice  c>f  defenses  which  may  be  set  up  by  the 
maker  against  its  collection.  If  the  stipulation  for  an  attorney's 
fee  is  of  such  a  character  as  to  make  the  amount  to  be  paid  at 
maturity  uncertain  or  indefinite,  the  note  cannot  be  regarded  as 
negotiable  so  as  to  authorize  a  suit  upon  it  by  the  indorsee ;  but, 
where  the  stipulation  does  not  have  such  an  effect,  its  insertion 
in  the  note  does  not  destroy  the  negotiability  of  the  note. 

When  the  amount  to  be  paid  at  maturity  is  certain  and  fixed, 
the  maker  knows  what  he  is  to  pay,  and  the  holder  knows  what  he 
is  to  receive,  from  the  face  of  the  note  itself.  Commercial  paper 
is  expected  to  be  paid  promp'ly  when  it  is  due.  A  stipulation  for 
an  attorney's  fee,  which  is  only  to  be  recovered  if  the  note  is  not 
paid  when  due  and  suit  is  brought  upon  it,  can  have  no  force 
except  upon  tlie  maker's  default.  If  he  keeps  his  contract  by 
pnying  his  note  at  its  maturit}^,  he  will  not  be  obliged  to  pay  the 
additional  amount;  and  no  element  of  uncertainty  enters  into  the 
contract.  By  the  stipulation,  the  maker  offers  to  the  holder  an 
assurance  of  his  own  confidence  in  his  ab  liiy  to  pay  witlioutsuit, 
and  thereby  adds  to  the  value  of  the  pap  r  as  promising  less  ex- 
pense in  its  collection.  It  has  bet  n  said  that  "  the  additional 
agreement  relates  rather  to  the  remedy  upon  the  note,  if  a  legal 
remedy  be  pursued,  than  to  the  sum  which  the  maker  is  bound 

58 


CH.  II.]  PARTS    OF    BILLS    AND    NOTES.  ILL.   CAS. 

to  pay ;  and  that  it  is  not  different  in  its  character  from  a  cogno- 
vit, which,  when  attached  to  promissory  notes,  does  rot  destroy 
liieir  negotiabiht3\"  Daniel  Neg.  Inst.  (4th  ed.),  §§  02,  62a. 
We  do  not  think  that  the  negotiability  of  the  notes  in  this  ease 
was  destroyed  by  the  stipulations  therein  as  to  attorneys'  fees. 

The  view  here  expressed  is  sustained  by  the  authorilies.  In 
Nickcrson  v.  Sheldon,  33  III.  372,  the  note  contnined  this  pro- 
vision: "And  we  further  agree,  if  the  above  note  is  not  paid 
without  suit,  to  pay  ten  dollars,  in  addition  to  tlie  above,  for 
attorneys'  fees."  In  that  case  the  plaintiff  did  not  declare  for 
the  SlO,  and  hence  the  recovery  was  only  for  tlie  principal  and 
interest  due  on  the  note,  but  we  held  the  note  to  be  ni  goliable 
uadtr  the  statute,  and  said:  "The  amount  due  by  this  note  is 
absolutely  certain,  and  it  possesses  all  the  requisites  of  a  negoti- 
able instrument  undrr  the  statute.  Stewart  r.  Smith,  28  III.  397. 
There  is  no  unci-rtainty  us  to  the  precise  sum  of  money  to  be 
paid  on  the  maturity  of  the  note.  Bane  v.  Gridh  y,  67  111.  388  ; 
Gobble  V.  Linder,  76  111.  157;  Barton  v.  Bank,  122  111.  352;  13 
N.  E.  Rep.  503."  In  Stontman  v.  Pyle,  35  Ind.  103,  the  note 
contained  a  stipulation  for  the  payment  of  attorne3's'  fees  should 
suit  be  instituted  tiiereon,  and  it  was  said:  "  We  see  no  reason, 
on  principle  or  authority,  or  on  grounds  of  public  policy,  for 
holding  that  such  a  stipulation  destroys  the  commercial  character 
of  paper  otherwi-e  having  that  character.  *  *  *  So  here  the 
defendant  had  the  right  to  pay  the  face  of  the  note  wh'  n  due, 
and  avoid  the  attorneys'  f.ns.  As  long  as  the  note  retained  the 
peculiar  characteristics  of  commercial  paiier,  viz.,  up  to  the  t  me 
of  its  maturitj'  and  dishonor,  the  amount  t )  be  paid  on  the  one 
hand,  and  recovered  on  the  other,  was  fixed  and  definite." 
Smock  V.  Ripley,  62  Ind.  81.  In  Gaar  v.  BankingCo.,  11  Bush, 
180,  there  was  indorsed  upon  the  back  of  an  acce[)ted  bill  of 
exchange  an  agreement  by  the  drawers,  indorsers,  and  acceptors 
thereof  "  to  i)ay  a  reasonalilo  attorney's  fee  to  any  holder  there- 
of if  the  same  shall  thereafter  1)0  sued  upon,  and  also  pay  interest 
at  the  rate  of  ten  p*  r  cent  per  auuutn  after  maturity  until  paid  ;" 
and  it  was  claimed  that  the  written  agreement  so  indorsed  upon 
the  bill  destroyed  its  negotiability  on  the  ground  that  the  amount 
of  the  attorney's  fee  was  not  ascertuned,  and  hfucc  that  the  bill 
was  for  an  uncertain  amount;  but  the  court  held  otherwiso,  and 
said :  "  The  amount  to  be  jiaid  at  maturity  was  fixed  and  c»  rtain, 
and  it  was  only  in  the  event  that  the  l)ill  was  not  paid  when  due 
that  any  uncertainty  arose.  The  reason  that  the  rule  that  the 
amount  to  l)e  paid  must  be  fixed  and  ci  rtain  is  that  the  pnjjer  is 
to  become  a  sul)stitute  for  money,  and  this  it  cannot  be,  unless 
it  can  be  ascertained  from  it  exactly  how  nuich  money  it  rei)re- 
sents.  As  long,  therefore,  as  it  remains  a  snbstiiute  for  money, 
the  amount  which  it  entiths  the  holdt  r  to  demand  must  be  fixed 
and  certain  ;  1)ut  when  it  is  past  due  it  ceases  tu  have  that  |  eculiar 
quality  denominated  '  ucgotialiilit}^ '  or  to  perform  the  otiice  of 
mone}' ;  and  hence  anything  which  only  renders  its  amount  uncer- 

59 


ILL.  CAS.  PARTS    OF    BILLS    AND    NOTES.  [CH.   ][I. 

taiu  after  it  has  ceased  to  be  a  substitute  for  money,  but  which  in 
nowise  affected  it  until  after  it  had  performed  its  office,  can- 
not prevent  it  becoming  negotiable  paper."  In  Seaton  v. 
Scovill,  18  Kan.  433,  a  note  for  the  payment  of  a  certain  sum, 
"  with  interest  at  twelve  i)er  cent  per  annum  after  due  until  paid, 
also  costs  of  collecting,  including  reasonable  attorneys'  fees  if 
suit  be  instituted  on  this  note,"  was  held  to  be  negotable;  and 
iNIr.  Justice  Brewer,  delivering  the  opinion  of  the  court,  quoted 
witli  approval  the  above  extract  from  the  Kentucky  case,  and 
said:  "The  amount  due  at  the  maturity  of  the  pa|)er  is  certain; 
and  the  only  uncertaint}' is  in  the  amount  which  shall  be  collectible 
in  case  the  maker  defaults,  at  the  maturity  of  the  paper,  iu  his 
promise  to  pay,  and  the  holder  is  driven  to  the  necessity  of  insti- 
tuting a  suit  for  collection,  and  then  only  as  to  the  expenses  of 
such  collection."  In  Sperry  v.  H  'rr,  32  Iowa,  184,  each  of  the 
notes  sued  upon  was  for  a  certain  sum,  and  contained  the  follow- 
ing words:  "  With  ten  per  cent  intere-t  until  paid;  if  not  paid 
when  due,  and  suit  is  brought ;  thereon,  I  hereby  agree  to  pay 
collection  and  attorneys'  fees  therefor;  "  and  the  court  held  tlusm 
to  be  negotiable,  saying  the  attorneys'  fees  are  not  part  of  the 
sums  due  on  the  notes,  but  are  an  amount  for  which  the  maker 
may  become  liable  when  a  legal  remedy  is  enforced  against  him. 
Shugart  v.  Pattee,  37  Iowa,  422  ;  Bank  v.  Breese,  39  Iowa,  640; 
Howenstein  v.  Barnes,  5  Dill.  482;  Sclilesinger  v.  Arline,  31  Fed. 
Rep.  648  ;  Sewing  Mach.  Co.  v.  Moreno,  6  Sawy.  35  ;  7  Fed.  Rep. 
806. 

Inasmuch  as  llie  n  te  is  negotiable,  and  |)asses  by  indorsement 
to  the  assignee,  the  agreement  as  to  the  attorney's  fee  also  passes 
to  such  assignee  as  a  part  of  the  note.  The  stipulation  or  promise 
to  pay  the  attorney's  fee  is  not  made  with  the  payee  alone.  The 
note  is  payable  to  the  payee  or  order.  The  promise  is  as 
much  to  the  holder  as  to  the  original  payee.  The  fee  is  to  l)e 
paid  if  the  note  is  not  paid  when  due,  whether  it  is  then  owned  by 
tlie  pa\ee  or  by  any  other  holder.  Moreover,  the  attorney's  fee 
is  an  incident  to  the  main  debt  and  passes  with  it.  Bunk  v.  Ellis, 
2  Fed.  Rep.  44;  2  Daniel  Neg.  Inst.,  §  62a;  Adams  v.  Adding- 
ton,  16  Fed.  Rtp.  89.  The  promise  to  pay  it,  thereby  lessening 
the  cost  of  collection  in  case  of  suit,  gives  the  note  currency  as 
well  as  security,  and  is  regarded  as  a  provision  for  the  indorsee 
or  holder  as  well  as  for  the  payee.  Bank  v.  Ellis,  6  Sawy.  96  ;  2 
Fed.  Rep.  44,  Daniel,  iu  his  work  on  Negotiable  Instruments 
(volume  2,  §  62o),  says:  "  When  the  added  stipulation  is  deemed 
valid,  and  the  bill  or  note  negotiable,  such  stipulation  becomes  a 
part  of  the  acceptor's  or  indorser's  contract,  and  need  not  be 
sued  for  by  the  attorney,  but  it  is  recoverable  by  the  holder  of 
the  instrument."     See  cases  cited  in  note  3. 

A  further  question  arises  as  to  the  mode  of  enforcing  the  col- 
lection of  the  fee.  It  is  said  that  it  cannot  be  recovered  in  a  sepa- 
rate suit  if  it  is  not  embraced  in  the  recovery  on  the  note.  Such 
seems  to  be  the  doctrine  in  Indiana.     Smiley  v.  Meir,  47  Ind. 

60 


CH.  II.]  PARTS    OF    BILLS    AND    NOTES.  ILL.   CAS. 

559.  In  a  case  in  Iowa,  also,  where  the  note  sued  on  contained 
a  stipulation  "to  pay,  in  addition  to  the  amount  thereof,  fifteen 
dollars  attorneys'  fees  if  the  note  is  collected  by  suit,"  it  was 
held  not  to  be  the  intention  of  the  parties  that  the  fee  should 
become  due  only  after  the  note  was  collected  by  suit,  but  to  be 
their  intention  that  the  fee  should  be  recoverable  with  the  amount 
of  the  note.  Shugart  v.  Pattee,  37  Iowa,  422.  In  this  State  it 
has  been  held  that  the  fee  is  not  due  when  the  suit  is  brought  on 
the  note,  and  therefore  cannot  be  included  in  the  assessment  of 
damages.  Nickerson  v.  Babcock,  29  111.  497 ;  Easter  v.  Boyd, 
79  ill.  325.  In  the  two  cases,  however,  in  which  this  court  so 
held,  there  was  no  express  agreement  in  the  note  that  the  fee 
might  be  recovered  in  a  separate  suit.  Nickerson  v.  Babcock, 
supra;  Easter -y.  Bo^nl,  supra.  In  the  case  at  bar,  the  promise 
is  "to  pay  ten  per  cent  on  the  amount  due  hereon  in  addition  as 
an  attorney's  fee,  and  to  be  recovered  as  a  part  of  this  note  or  by 
separate  suit."  Whether  or  not  a  stipulation  to  pay  the  fee  to  be 
recovered  as  a  part  of  the  note,  in  case  suit  is  brought  on  it  for 
its  non-payment  when  due,  is  so  far  a  mere  incident  to  the  main 
debt  that  a  separate  suit  cannot  be  brought  for  the  fee  after  the 
termination  of  the  suit  on  the  note  is  a  question  which  is  not  pre- 
sented by  this  record.  We  see  no  reason  why  the  maker  of  the 
note  may  not  stipulate  that  a  separate  suit  may  be  brought  for 
the  fee,  and  why  such  stipulation  cannot  be  enforced  by  the  payee 
or  the  bolder.  If  the  written  promise  to  pay  the  fee  passes  to  the 
holder  by  the  indorsement,  the  written  agreement  as  to  the  mode 
of  ricovery  also  passes.  The  fact  that  tlie  engagement  to  pay  a 
fee  is  incidental  and  auxiliary  to  the  main  engagement  to  pay  the 
debt  does  not  prevent  the  maker  of  the  note  from  agreeing  to  sub- 
mit to  a  separate  suit  for  the  recovery  of  the  fee.  We  are  there- 
fore of  the  opinion  that  the  present  suit  is  properly  brought. 

It  is  further  claimed  that  the  agreement  to  pay  the  10  per  cent 
as  a  fee  is  usurious.  The  authorities  above  referred  to  hold  to 
the  contrary.  Stoneman  v.  Pyle,  supra;  Sewing  Mach.  Co.  v. 
Moreno,  supra.  See,  also,  2  Pars.  Notes  &  B.,  pp.  413,414; 
Clawsonv.  Munson,  55  111.  394;  Barton  v.  Bank,  122  111.  352;  13 
N.  E.  Rep.  503.  There  is  here  no  violation  of  the  usury  law, 
because  the  agi'eement  "  provides  for  new  or  additional  compen- 
sation or  interest  for  the  use  of  the  money  because  of  the  failure 
to  pay  at  maturity.  It  is  not  in  the  nature  of  a  contract  for 
additional  interest,  but  a  [)rovision  merely  against  loss  or  damage 
to  the  payee  (or  holder)  si)ecjfically  pointed  out."  Barton  v. 
Bank,  supra.  There  is  nothing  to  show  that  10  per  cent  on  the 
amount  due  is  an  unreasonable  fee.  The  defendant  stood  by  his 
demurrer  to  the  declaration,  which  described  the  notes,  and  the 
provision  therein  for  a  fee  of  10  per  cent.  The  declaration  must 
therefore  be  regarded  as  alleging,  in  substance,  that  a  reasonable 
attorney's  fee  was  10  per  cent  on  the  amount  due  on  the  notes. 
Smile}'  V.  Meir,  supra.  The  judgment  of  the  appellate  court  is 
afllrmed. 

61 


ILL.  CAS.  PARTS   OF   BILLS   AND   NOTES.  [CH.  II, 

Effect  of  Seal  on  Negotiability. 

Brown  v.  Jordhal,  32  Minn.  135  (1!)  N.  W.  GoO). 

Plaintiff  brought  this  action  as  holder  of  the  following  instru- 
ment, having  brought  it  in  good  faith  for  value,  in  the  usual  course 
of  business,  before  maturity,  and  without  notice  of  any  defense 
to  it:— 

"  ^120.  Township  of  Manchester,  Feb.  23,  1881. 

"  Six  months  after  date  (or  before,  if  made  out  of  the  sale  of 
Drake's  horse,  hay,  fork  and  hay-carrier)  I  promise  to  pay  James 
B.  Drake,  or  bearer,  one  hundred  and  twenty  dollars. 

"  Negotiable  and  payable  at  the  Freeborn  County  Bank,  Albert 
Lee,  Minn.,  with  ten  per  cent  interest  after  maturity  until  paid. 

"  OlE    J.    JOKDHAL.        [seal] 

"  Witness:  J.  Williamson."  [seal] 

Plaintiff  admitted  on  the  trial  that  the  note  was  obtained  from 
defendant  by  fraud,  and  that  as  between  the  original  parties  it 
was  "without  consideration  and  fraudulent.  The  court  thereupon 
directed  a  verdict  for  defendant;  a  new  trial  was  denied,  and 
defendant  appealed. 

Gilfillan,  C.  J.  The  defendant  executed  an  instrument  in  the 
form  of  a  negotiable  promissory  note,  except  that  after  and  oppo- 
site the  signature  were  brackets,  and  between  them  the  word 
"seal,"  thus  "[Seal.]"  The  question  in  the  case  is,  is  this  a 
negotiable  promissory  note,  so  as  to  be  entitled  to  the  peculiar 
privileges  and  immunities  accorded  to  commercial  paper?  The 
rule  that  an  instrument  under  seal,  though  otherwise  in  the  form 
of  a  promissory  note,  is  not  (certainly  when  executed  by  a  natural 
person,  however  it  may  be  when  executed  by  a  corporation)  a 
negotiable  note,  entitled  to  such  privileges  and  immunities,  is 
universally  recognized,  and  is  not  disputed  in  this  State.  But  the 
appellant  contends  that  merely  placing  upon  an  instrument  a  scroll 
or  device,  such  as  the  statute  allows  as  a  substitute  for  a  common- 
law  seal,  without  any  recognition  of  it  as  a  seal  in  the  bod\'  of  the 
instrument,  does  not  make  it  a  sealed  instrument.  Undoubtedly 
where  there  is  a  scroll  or  device  upon  an  instrument,  there  must  be 
something  upon  the  instrument  to  show  that  the  scroll  or  device 
was  intended  for  and  used  as  a  seal.  The  scroll  or  device  does 
not  necessarily,  as  does  a  common-law  seal,  establish  its  own 
character.  Such  words  in  the  testimoniv.m  clause  as  "witness 
my  hand  and  seal,"  or  "  sealed  with  my  seal,"  would  establish 
that  the  scroll  or  device  was  used  as  a  seal.  No  such  reference 
iu  the  bod}^  of  the  instrument  was  necessary  in  the  case  of  a 
common-law  seal.  Goddard'sCase,  2  Coke  Rep.  5  a ;  7  Bac.  Abr. 
(Bouvier's  ed.)  244.  Nor  is  there  any  reason  to  require  it  in  the 
case  of  the  statutory  substitute,  if  the  instrument  anywhere  shows 
clearly  that  tlie  device  was  used  as  and  intended  for  a  seal.  It 
would  be  difficult  to  conceive  how  the  party  could  express  that 

62 


CH.   II.]  ARTS    OF    BILLS    AND    NOTES.  ILL.  CAS. 

the  device  was  intended  for  a  seal  more  clearly  than  by  the  word 
"  seal,"  placed  within  and  made  a  part  of  it.  This  was  an  instru- 
ment under  seal.     Order  alHrraed. 


Bill  or  Xote  Delivered  in  Escrow — Right  of  Bona  Fide 
Holder  and  Obligors. 

Riggs  V.  Trees,  120  Ind.  402  (22  N.  E.  254). 

Elliott,  C.  J.  The  appellants  were  partners,  doing  business 
as  real-estate  brokers.  Swain  emplo3'ed  them  to  sell  his  farm,  and 
they  did  sell  it  to  the  appellee  for  §4,000.  As  part  of  the  pur- 
chase price  the  appellee  assumed  and  agreed  to  pay  the  princpal, 
but  not  the  interest,  of  a  mortgage  executed  to  an  insurance  corn- 
puny  to  secure  §1,800.  A  like  amount  was  paid  in  cash,  and  a 
note  for  the  remainder  was  executed  by  the  appellee,  and  to  secure 
its  payment  he  executed  a  mortgage  upon  the  land  bought  of 
Swain.  The  note  was  payable  in  bank,  and  was  placed  in  the 
hands  of  the  appellants.  By  the  terms  of  the  contract  between 
the  parties  the  note  was  to  be  held  by  the  appellants  until  an  ali- 
stract  of  title  was  furnished  to  tbe  appellee,  and  all  liens  against 
the  land  paid  and  discharged.  The  note  was  not  placed  in  the 
hands  of  the  appellants  for  the  purpose  of  passing  the  title  to  it, 
but  for  the  purpose  of  delivering  it  to  Swain,  and  closing  the  sale 
as  soon  as  he  had  complied  with  his  agreement  and  paid  the  liens 
on  the  land.  The  appellants,  nothwithstanding  their  agreement 
to  retain  possession  of  the  note  and  mortgage,  delivered  them, 
without  the  consent  of  the  appellee,  to  Swain.  Tlie  note  was  trans- 
ferred by  indorsement  to  a  pors(ni  for  a  valuable  consideration, 
before  maturity,  and  the  indorsee  received  it  without  notice  of 
any  defense.  At  the  time  the  contract  of  sale  was  made  there 
were  liens  on  the  lands  to  the  amount  of  §108  above  the  amount 
of  the  incumbrance  assumed  by  the  appellee.  Swain  is  insolvent, 
and  is  not  a  resident  of  the  State. 

The  appellee  could  not  have  successfully  defended  against  the 
note  in  the  hands  of  the  indorsee,  for  it  was  by  his  act  that  the 
appellants  were  etia1)k'd  to  put  the  notein  circulation,  and  he  must 
suffer  rather  than  the  innocent  third  person.  The  principle  which 
rules  here  is  the  same  as  that  which  prevailed  in  Quick  v.  Milli- 
gan,  108  Ind.  419  ;  t)  N.  E.  Rep.  392.  One  who  places  in  another's 
hands  his  promissory  note,  perfect  in  all  its  parts,  cannot  defeat 
the  note  in  the  hands  of  a  honajhle  holder.  Tiie  rule,  indeed,  in 
cases  of  promissory  notes  negotiable  under  the  law-merchant,  ex- 
tends much  further,  but  we  need  do  no  more  than  apply  the  prin- 
ciple we  have  indicated  as  the  governing  one,  although  a  much 
broader  rule  might  be  applied.  The  appellants  violated  their 
contract,  and  must  respond  in  damages.  It  is  no  defense  for 
iLem  to  assert  that  in  law  the  delivery  to  them  was  absolute,  and 
transferred  title  to  Swain  at  once  ;  for,  whatever  may  be  the  rule 

63 


ILL.  CAS.  PARTS    OF   BILLS   AND   NOTES.  [CH.  II. 

as  between  pa3'or  and  payee,  it  is  quite  clear  tliat  the  appellants, 
having  agreed  to  retain  the  note,  were  bound  to  keep  their  con- 
tract. The  assumption  that  the  appellants  were  the  agents  of 
Swain  is  unfounded,  for  they  undertook  to  retain  the  notes  under 
an  agreement  with  the  appellee,  and  not  as  Swain's  agent.  But  if 
they  had  received  the  notes  as  the  agents  of  Swain  they  had  no 
right  to  violate  their  agreement  with  the  appellee.  If  Swain  him- 
self had  made  such  an  agreement,  and  it  was  properly  evidenced 
by  writing,  he  would  have  no  right  to  violate  it.  Judgment 
affirmed,  with  10  per  cent  damages  and  costs. 

64 


CHAPTER     III. 

AGREEMENTS  CONTROLLING  THE   OPERATION   OF   BILLS    AND 

NOTES. 

Section  29.  Kinds  of  agreements. 

30.  "What  memoranda  will  control. 

31.  Collateral  agreements. 

32.  Agreements  to  renew. 

§  29.  Kinds  of  agreements. —  Agreements,  which  are 
intended  to  control  the  operation  of  bills  and  notes,  are  of 
two  principal  kinds,  viz.  ;  memoranda  on  the  face  or  back 
of  the  instruments,  and  collateral  or  independent  agree- 
ments. The  principal  legal  difference  between  the  two 
kinds  lies  in  the  fact,  that  the  memorandum  when  inscribed 
on  the  bil'l  or  note,  will  furnish  actual  or  constructive  notice 
of  itself  to  all  subsequent  holders,  and  hence  will  control 
the  operation  or  character  of  the  instrument,  into  whose- 
soever hands  it  may  fall.^  Whereas,  collateral  agreements 
can  only  control  the  operation  of  the  instrument  as  to  those 
parties  to  it,  who  have  received  actual  notice  of  their 
existence.  There  can  be  no  constructive  notice  of  such  an 
agreement,  for  nothing  appears  in  the  body  of  the  bill  or 
note. 

§  30.  What  memoranda  will  control. —  Not  every  mem- 
orandum will  be  hold  to  bo  a  part  of  a  bill  or  note  ;  only 
those  which  by  their  terms  are  evidently  designed  to,  and 
actually  d»,  affect  their  character,  and  control  the  oi)era- 
tion  of  the  instrument.  If  the  memorandum  is  of  such 
content  that  it  could  only  have  been  intended  as  an  aid  to  the 
memory  of  the  holder  or  maker,  to  identify  the  instrument 
itself,  or  its  source  and  consideration  ;   or  where  the  memo- 

1  Perry  v.  Bigelow,  128  Mass.  129;  Wait  v.  Pomeroy,  20  Mich.  425  f4 
Am.  Rep.  34.'));  Ziramerraau  v.  Role,  75  Pa.  St.  188;  Farmers'  Bank  v. 
Ewing,  78  Ky.  2fil  (19  Am.  Re;).  231). 

n  G5 


§   30  AGREEMENTS    CONTROLLING    OPKUATION.       [CH.   III. 

randum  is  a  direction  to  the  holder's  own  agents  what  to 
do  with  it,  it  will  not  become  an  integral  part  of  the  bill  or 
note,  and  can  therefore  not  change  or  alter  its  character.^ 
Nor  can  the  memorandum  be  treated  as  a  part  of  the  bill  or 
note,  where  it  is  so  ambiguous  and  repugnant  to  the  other 
contents,  that  parol  evidence  is  necessary  to  explain  its  im- 
port ;  or  where  the  agreement  is  repugnant  to  the  assign- 
ment or  transfer  of  the  instrument. ^  But  with  these 
limitations,  any  memorandum,  written  in  any  part  of  the 
bill  or  note,  will  constitute  a  part  of  it,  and  control  its  opera- 
tion. Thus,  memoranda  have  been  held  to  be  a  part  of  a 
note  or  bill,  which  impose  conditions  precedent  to  the  obli- 
gation to  pay ,^  which  stipulate  a  place  of  payment,*  a  waiver 
of  presentment,  notice  and  protest,^  or  which  provides  that 
the  note  is  given  as  security^  or  stipulate  time  of  pay- 
ment, even  though  it  makes  the  time  uncertain  or  condi- 
tional, and  thus  destroys  the  negotiability  of  the  paper. ^ 
Memoranda  may  also  control  the  note  or  bill,  where  they 
provide  for  payment  in  a  particular  kind  of  money  or  cur- 
rency.^ If  the  memorandum  is  made  contemporaneously 
with  the  execution  of  the  bill  or  note,  it  clearly  becomes  a 
constituent  part  of  it ;  and  it  is  always  presumed  that  a 

1  Fitch  V.  Jones,  5  El.  &  B.  238;  Benedict  v.  Cowden,  49  N.  Y.  396 
(10  Am.  Rep.  382). 

^  Way  V.  Batchelder,  129  Mass.  361  (repugnant  as  to  time  of  payment)  ; 
Leland  v.  Parriott,  35  Iowa,  454  (memorandum  that  note  is  not  to  be 
sold). 

3  Henry  v.  Colraau,  5  Vt.  402;  Gushing  v.  Fifleld,  70  Me.  50  (35  Am. 
Rep.  293)  ;  Wait  v.  Pomeroy,  20  Mich.  425  (4  Am.  Rep.  395). 

4  Tuckerman  v.  Hartwell,  3  Me.  147  (14  Am.  Dec.  225);  Woodworth 
V.  Bk.  of  America,  19  John?.  391  (10  Am.  Dec.  239).  But  see,  contra,  Am. 
Nat.  Bank  u.  Bangs  42  Mo.  450  (97  Am.  Dec.  D49). 

5  Farmers'  Bank  v.  Ewiiig,  78  Ky.  264  (39  Am.  Rtp.  231). 

6  Nat.  Security  Bank  v.  McDonald,  127  Mass.  82;  Cholmley  v.  Darley, 
14M.  &W.  344. 

''  Johnson  v.  Heagan,  23  Me.  329;  Franklyn  Sav.  Bank  v.  Reed,  125 
Mass.  365;  Effluger  v.  Richards,  35  Miss.  (6  Geo.)  540. 

^  Jones  V.  Fales,  4  Mass.  245  (  "  foreign  bills")  ;  Fletcher  v.  Blodgett, 
16  Vt.  26  (42  Am.  Dec.  487)  (payable  in  fulled  cloth);  Benedict  r.  Cow- 
den, 49  N.  Y.  396;  10  Am.  Rep.  382  (to  ba  paid  from  profits  of  machines 
when  sold). 

66 


CH.  III.]    agrp:emexts  contuollinc}  operation.  §  32 

memoraiuluiii  has  been  written  on  a  bill  or  note  before 
delivery.*  Where  the  memorandum  is  added  to  the  bill  or 
note  after  its  negotiation,  with  the  consent  of  both  parties, 
it  will  constitute  a  part  of  the  instrument,  controlling  its 
operation  ;  but  if  it  is  added  without  the  consent  of  all  the 
parties,  it  will  not  be  a  part  of  the  instrument  ;  and  if  it 
materially  controls  or  changes  the  liability  of  the  parties, 
it  will  be  an  alteration  which  will  invalidate  the  bill  or  note.^ 

§  31.  Collateral  agreements. —  If  an  agreement  is  en- 
tered into  by  the  parties  to  a  bill  or  note,  collateral  to  it, 
contemporaneously  with  the  execution  and  negotiation  of 
the  instrument,  the  collateral  agreement  must  be  in  writ- 
ing in  order  to  be  valid,  and  control  the  operation  of 
such  bill  or  note  ;  in  obedience  to  the  general  rule  of  evi- 
dence, which  prohibits  the  admission  of  parol  evidence  to 
vary  or  control  the  provisions  of  a  written  instrument.^ 
Subsequent  agreements,  whose  terms  change  those  of 
bills  and  notes,  already  delivered,  partake  of  the  nature 
of  novations  ;  and  if  they  are  based  upon  a  sufficient  con- 
sideration and  are  fully  executed  or  performed,  they  are 
binding  upon  all  parties  who  lake  the  note  or  bill  with 
notice  of  the  collator  1 1  agreement,  although  they  may  not 
have  been  reduced  to  writing.* 

§  32.  Agreements  to  renew. —  The  most  frequent  col- 
lateral agreement  in  practice  is  the  agreement  for  renewal 
of  a  note  or  bill.     If  it  is  contemporaneous,  it  must  be  in 

1  Tuckerman  v.  Hartwell,  3  Me.  147  (U  Am.  Dec.  225) ;  Henry  v.  Col- 
man,  5  Vt.  402;  Effinger  v.  Richards,  35  Miss.  ((>  Geo.)  540;  Makepeace  v. 
Harvard  College,  10  Pick.  2!)8.  Bit  s^e  B  ly  v.  Shrader,  50  Miss.  336, 
where  it  is  held  that  the  presumption  is  contra,  where  the  memorandum 
is  on  the  back,  instead  of  on  the  face  of  the  instrument. 

2  See  post,  chapter  on  Forgeries  and  Alterations. 

3  Fleming  v.  Gilbert,  3  Johns.  520;  Noell  v.  Gaines,  68  Mo.  649;  Bruce 
V.  Carter,  72  N.  Y.  610;  Elliott  v.  D.ason,  64  Ga.  63;  Polo  Mfg.  Co.  v. 
Parr,  8  Neb.  379  (30  Am.  Rep.  830);  Dobbins  v.  Parker,  46  Iowa,  357; 
Mnz7,y  V.  Knight,  8  Kan.  450. 

*  Dnv  I'.  Tuttle,  4  Mass.  414  (3  Am.  Dec.  22(1);  Allen  v.  Furbish,  4 
Gray,  504  (64  Am.  Dec.  87)  ;  Kelso  v.  Frye,  4  Bibb.  493. 

G7 


III.   CAS.    AGREEMENTS    CONTFJOLLING    OPERATION.      [CH.   III. 

writing;  if  it  is  subsequent,  it  must  be  supported  by  an 
independent  consideration.^  A  contract  for  renewal  is 
exhausted  by  one  renewal ;  ^  and  it  has  been  held  that  the 
agreement  must  state  with  certainty  the  time  of  extension, 
in  order  to  bind  all  parties  to  the  note  or  bill.^ 


ILLUSTRATIVE   CASES. 

Coapstick  v.  Bosworth,  121  lud.  6  (22  N.  E.  772). 
Jacobs  V.  Mitchell,  46  Ohio  St.  601  (22  N.  E.  768). 
Horuer  v.  Horner,  145  Pa.  St.  258  (23  A.  441). 

Oral  Agreement  Affecting'  Terms  of  Xote  Inadmissible. 

Coapstick  v.  Bosworth,  121  Ind.  6  (22  N.  E.  772). 

Berkshire,  J.  This  was  a  suit  upon  a  promissory  note,  which 
reads  as  follows:  "$400.  Sedalia,  Ind.,  March  19th,  1884. 
One  year  after  date,  for  vakie  received,  I  promise  to  pay  Mary  A. 
Bosworth  four  hundred  dolhu-s  ;  tliis  note  to  be  collected  by  her- 
self during  her  natural  life.  If  not  collected  before  her  decease, 
it  shall  be  void  as  to  other  parties.  Washington  W.  Coapstick." 
Issue  having  been  joined,  the  cnse  was  submitted  to  the  court  for 
trial,  and  a  finding  made  fur  the  plaintiff.  The  appellant  then 
filed  a  motion  for  a  new  trial,  which  the  court  overruled,  and  he 
saved  an  exception.  The  court  then  rendered  judgment  upon  the 
finding  for  the  amount  due  upon  tlie  note.  Before  entering  upon 
the  trial  the  appellant  made  a  moti  n  for  a  continuance,  which 
was  overruled,  and  an  exception  jtroperly  reserved. 

There  are  but  two  errors  assigned:  (1)  The  court  erred  in 
overruling  the  motion  for  a  continuance.  (2)  The  court  erred  in 
overruling  the  motion  for  a  new  trial.  Both  errors  present  the 
same  question, —  the  competencj'  of  certain  evidence  which  the 
appellant  offered  to  introduce.  The  testimony  offered  by  the 
appellant  was,  in  substance,  as  follows :  That  at  the  date  of  the 
execution  of  the  note  the  parties  were  tenants  in  common  of  a 
certain  t:  act  of  land,  the  appellan'-j  holding  title  to  three-fourths 
and  the  appellee  to  one-fourth  thereof  ;  tliat  at  the  date  on  which 
the  note  was  executed,  and  contemporaneous  therewith,  it  was 
agreed  between  the  parties  that  the  appellee  should  convey  her 
one-fourth  interest  to  the  appellant,  and  that  in  consideration 

1  L'rae  Rock  Bank  v.  Mallett,  34  Me.  547  (56  Am.  Dec.  673);  Central 
Bank  v.  Willard,  17  Pick.  150  (28  Am.  Dec.  284)  ;  Franklin  Sav.  Bank  v. 
Reed,  125  Mass.  365. 

2  Innes  v.  Munro,  1  Exch.  473. 

3  Krouskop  V.  Shoutz,  51  Wis.  204  (8  N.  W.  241). 

68 


CII.   III.]     AGREEMENTS    CONTROLLING    OPEKATION.     ILL.   CAS. 

thereof  he  should  pay  her  thereafter  an  annuity  not  to  exceed  $40, 
"which  should  be  given  her  in  goods,  provisions,  or  money,  from 
time  to  time,  as  she  might  need  it  during  her  natural  life,  but  that 
in  no  event  should  such  payment  exceed  $40  per  annum ;  that 
one  Shields,  a  notar}'^  public,  was  called  upon  to  write  out  and 
take  said  Mary's  acknowledgment  to  the  deed  for  her  said  interest 
in  the  land  ;  that  at  his  suggestion  the  note  sued  on  was  drawn  up 
and  signed  for  the  purpose  of  secunng  the  appellee  in  the  pay- 
ment of  said  annuity,  and  for  no  other  or  different  purpose  ;  that 
it  was  agreed  and  understood  at  the  time  of  the  execution  of  the 
note  and  deed  that  no  part  of  said  note  was  ever  to  be  paid  except 
in  the  manner  aforesaid,  and  that  it  was  not  to  be  paid  at  all, 
even  as  an  anuuit}',  after  the  appellee's  death ;  that  no  other  or 
different  consideration  was  to  be  paid  to  the  appellee  for  her 
interest  in  said  land. 

It  is  well  settled  in  this  State  that  the  true  consideration  may 
be  shown  for  a  promissory  note  or  other  obligation  by  parol  evi- 
dence ;  and  if  there  was  no  consideration,  or  if  the  consideration 
has  failed,  parol  evidence  may  be  given  to  establish  the  fact. 
This  rule  of  law  is  so  well  established  that  we  do  not  feel 
called  upon  to  cite  authorities.  If,  therefore,  the  offered 
evidence  had  a  tendency  to  show  that  the  note  was  executed 
without  consideration  in  whole  or  in  part,  or  to  establish  a 
failure  of  consideration  as  to  all  or  any  part  of  the 
note,  the  court  erred  in  its  rulings  complained  of,  and  a  now  trial 
should  be  granted.  But  there  is  another  rule  which  is  equally 
well  settled, —  that  parol  evidence  will  not  be  received  of  a  pre- 
vious or  contemporaneous  verbal  understanding  between  the 
parties  to  vary  the  terms  and  conditions  of  a  written  contract  or 
obligation.  Stewart  v.  Babbs,  ante,  770  (present  term),  and 
authorities  cited.  But  we  need  not  cite  authorities  in  support  of 
this  well-established  rule.  If,  therefore,  the  offered  evidence  did 
not  go  to  the  consideration,  and  its  only  tendency  would  have 
been  to  prove  the  existence  of  a  contemporaneous  verbal  agree- 
ment inconsistent  with  the  terms  and  conditions  of  the  note,  then 
the  rulings  of  the  court  were  right,  and  the  judgment  should  be 
affirmed. 

It  is  evident  that  the  conveyance  was  the  consideration  for  the 
note.  It  is  conceded  by  the  offer  that  the  note  was  executed  to 
secure  to  the  appellee  the  amount  that  was  to  be  paid  to  her  for 
the  land.  It  is  not  claimed  that  the  amount  which  the  note  rep- 
resents is  not  the  price  that  was  agreed  on  for  the  land,  nor  that 
it  was  not  worth  the  amount  which  the  note  calls  for.  The  note 
and  conveyance  constituted  but  one  contract,  and  the  contract 
which  the  parties  finally  made,  and  the  same  is  not  impeached  by 
either  fraud  or  mistake.  Suppose  this  suit  had  not  been  com- 
menced, but  the  appellee  had  been  willing  to  take  $40  per  year, 
as  the  appellant  proposed  to  pay  her,  and  suppose  both  are  per- 
mitted to  live  for  20  years  or  more  from  the  date  at  which  the 
note  was  executed,  at  the  end  of  10  years  the  appellant  would 

69 


ILL.  CAS.  AGREEMENTS  CONTROLLING  OPERATION.   [CH.  III. 

pay  $400,  the  amount  of  the  note.  Could  the  appellee  compel 
the  appellant  to  continue  to  pay  her  the  $40  per  annum  ?  This 
will  hardly  be  claimed.  But  if  she  could,  upon  what  contract 
would  her  right  rest.^  Not  upon  the  written  contract  which  the 
parties  entered  into,  for  there  are  no  such  conditions  contained 
in  it.  The  action  would  have  to  be  maintained  either  upon  the 
verbal  agreement,  independent  of  the  written  contract,  or  upon 
the  latter,  varied  and  controlled  by  the  verbal  agreement ;  and 
this  would  be  in  violation  of  the  well-established  rule  to  which  we 
have  referred,  and  the  existence  of  which  the  appellant  concedes 
in  his  brief.  If  the  appellee  cannot  take  advantage  of  the  con- 
temporaneous verbal  agreement,  neither  can  the  appellant. 

The  ruling  of  the  court  is  so  clearly  right  that  we  feel  that  we 
must  affirm  the  judgment,  with  damages.  Judgment  affirmed, 
with  5  per  cent  damages,  and  costs. 


Contemporary    Agreement    as    to     Time     of     Payment 
w^liere  Time  is  Stipulated  in  the  Instrument. 

Jacobs  V.  Mitchell,  4G  Ohio  St.  601  (22  N.  E.  768). 

Error  to  circuit  court,  Allen  county. 

The  suit  below  was  brought  by  the  holders  against  the  maker 
of  a  promissory  note,  the  holders  averring  that  they  became  the 
owner  of  it  for  a  valuable  consideration  before  it  became  due. 
The  note  is  as  follows:  $4.00.  December  9,  1884.  Thirteen 
months  after  date  I  promise  to  pay  to  T.  J.  McElroy,  or  bearer, 
four  hundred  dollars,  value  received,  6  per  cent,  interest.  J.  W. 
Jacobs."  The  questions  arise  upon  a  demurrer  to  the  answer, 
which  is  as  follows:  First  defense.  The  said  defendant,  for 
ameuded  answer  to  plaintiff's  petition  says  that,  concurrent  with 
the  execution  and  delivery  of  the  note  upon  which  this  action  is 
brought,  the  payee  thereof,  one  T.  J.  McElroy,  representing 
himself  to  be  the  agent  of  the  ' '  Crawford,  Henry  &  Williams 
County  Bohemian  Oats  Association,"  executed  and  delivered  to 
said  defendant  a  written  agreement,  said  T.  J.  McElroy  rep- 
resenting to  said  defendant  that  he,  the  said  McElroy,  had 
full  authority  to  bind  said  company  as  its  agent.  It  is  ex- 
pressly stated  in  said  written  agreement,  executed  and  delivered 
by  said  McElroy  to  said -defendant,  that  the  note  given  by  said 
defendant  to  said  T.  J.  McElroy  should  not  be  due  and  payable, 
and  the  amount  therein  named  be  called  for,  until  said  Bohemian 
Oats  Association  should  sell  for  said  J.  W.  Jacobs  80  bushels  of 
Bohemian  oats  at  $10  per  bushel.  This  said  agreement  was  taken 
by  said  J.  W.  Jacobs  as  a  part  consideration  for  the  amount 
named  in  said  note,  which  said  Jacobs  agreed  to  pay  upon  fulfill- 
ment of  said  written  agreement.  The  only  other  consideration 
ever  received  by  said  Jacobs  for  said  note  was  40  bushels  of  oats, 
which  were  not  worth  more  than  40  cents  per  bushel  when  re- 
ceived.    The  terms  of  said  written  agreement  have  never  been 

70 


CH.   HI.]      AGREKMEXTS    CONTIIOLLING    OPERATION.    ILL.   CAS. 

complied  -svith,  either  by  said  T.  J.  McElroy  or  the  said  oat  asso- 
ciaiion  The  plaintiffs,  before  their  alleged  purchase  of  said 
note,  knew  that  said  written  agreement  existed,  and  had  full 
notice  of  the  force  and  intention  thereof,  and  defendant  denies 
that  plaintiffs  purchased  said  note  before  maturity.  Secoxd  de- 
fense. Said  defendant  says  that  the  said  note  upon  which  the 
action  was  brought  was  obtained  from  said  defendant  by  one  T. 
J.  McElroy,  payee,  by  fraud,  and  was  disposed  of  by  said  JMcElroy 
fraudulently,  and  that  said  fraud  consisted  of  this,  to  wit:  The 
said  T.  J.  McElroy,  on  or  about  the  9th  day  of  December,  1884, 
represented  to  said  defendant  that  he  was  the  agent  of  the 
"  Crawford,  Henry  &  Williams  County  Bohemian  Oats  Associa- 
tion," and  for  the  purpose  of  defrauding  said  defendant,  and  to 
obtain  his  signature  to  a  promissory  note,  agreed  to  deliver  to 
said  defendant  40  bushels  of  so-called  Bohemian  oats,  represent- 
ing falsely  tliat  said  oats  were  of  an  extraordinary  quality  and 
value,  when  in  fact  the  said  oats  were  of  no  more  value  tlian  oats 
ordinarily  raised  by  farmers  ;  and,  for  the  further  purpose  of  de- 
frauding said  defendant,  said  T.  J.  McElroy  represented  and 
agreed,  on  the  part  of  said  company,  that  if  said  defendant 
would  take  said  40  bushels  of  oats,  and  deliver  to  said  McElroy 
his  promissory  nole  for  the  sura  of  $400,  that  he,  the  said 
McElroy,  would  hold  said  note  and  not  dispose  of  it  until  after 
said  Bohemian  Oats  Company  should  sell  for  said  Jacobs  80 
bushels  of  oats  out  of  the  next  year's  crop,  at  ^10  per  bushel, 
and  that  said  note  would  then,  and  not  until  then,  have  tobepaid 
by  said  Jacobs.  Said  agreement  by  said  McElroy  on  the  part  of 
said  company  was  in  the  form  of  a  partly  written  and  partly 
printed  bond,  and  was  delivered  by  said  McElroy  to  said  defendant 
concurrent  with  the  delivery  of  sa'd  note,  who,  relying  on  the  said 
false  and  fraudulent  statements  of  said  McElroy,  and  believing 
that  they  were  true,  when  in  fact  said  false  representations  were 
made  with  intent  to  defraud  said  defendant  by  said  McElroy,  did 
sign  said  note,  and  deliver  the  same  to  said  McElroy,  who,  contrary 
to  his  said  agreement,  and  for  the  purpose  of  defrauding  said 
defendant,  disposed  of  said  note  so  that  defendant  might  not  be 
able  to  make  any  defense  thereto.  Said  agreement  by  said 
IMcElroy  to  sell,  or  cause  to  be  sold  bj'  said  company,  said  80 
bushels  of  oats,  has  not  been  performed,  although  the  time  has 
long  since  expired  when  said  oats  were  to  be  sold,  and  said 
Jacobs  retained  80  bushels  of  said  oats,  and  still  retains  saWl 
oats,  for  the  purpose  of  performing  said  contract  on  his  part. 
The  plaintiffs,  defendant  avers,  took  said  note  with  knowledge  of 
said  contract  between  said  McElroy  and  said  defendant;  and 
defendant  further  avers  that  plaintiffs  are  not  bona  fide  holders 
of  said  note.  Wherefore  defendant  asks  that  he  may  go  hence 
with  his  costs. 

The  demurrer  was  sustained,  and  judgment  rendered  for  the 
plaintiffs  ;  and  on  proceedings  in  error  the  judgment  was  afllrmed 
by  the  circuit  court. 

71 


ILL.   CAS.     AGREEMENTS    CONTEOLLING    OPERATION.      [CH.  III. 

Per  Curiam  (^after  stating  the  facts  as  above).  We  think  the 
court  erred  in  sustaining  the  demurrer  to  the  answer  of  the 
defendant.  The  first  defense  is  based  upon  the  non-performance 
of  a  contemporaneous  written  agreement,  made  and  entered  into 
by  the  parties  in  regard  to  the  note,  and  of  which  it  is  averred 
the  plaintiffs  had  notice  when  they  became  the  holders  of  it. 
They  then  stand  in  the  shoes  of  the  original  payee,  McElroy. 
Although  the  note  stipulates  that  it  is  payable  13  months  after 
date,  still  this  must  be  controlled,  as  between  parties  and  holders 
with  notice,  by  the  written  agreement ;  that  it  is  not  to  become 
due  and  payable  until  the  association  has  sold  for  the  maker  80 
bushels  of  oats  at  the  price  named.  2  Pars.  Notes  &  B.  144,  534. 
It  is  not  necessary  that  an  answer  should  be  returned  to  the 
question  why  the  parties  should  have  subjected  the  absolute  stip- 
ulation of  the  note  as  to  the  time  of  payment  to  the  provisional 
terms  of  the  written  agreement.  It  is  sufficient  to  say  that  they 
have  seen  fit  to  do  so,  and  the  agreement  is  binding  on  the 
holder.  The  effect  of  it  is  to  give  the  maker  the  right  to  pay  the 
note  according  to  its  terms,  or  to  decline  to  do  so  until  the  terms 
of  the  written  agreement  are  complied  with,  if,  in  his  judgment, 
it  would  be  more  prudent  to  do  so.  This  branch  of  the  answer, 
then,  states  a  sufficient  defense  to  the  action, —  non-performance 
of  the  agi'eement. 

The  case  of  Webb  v.  Spicer,  66  E.  C.  L.  894,  898,  is,  when 
rightly  considered,  not  in  conflict  with  this  holding.  The  point 
of  that  decision  was  that  the  written  agreement  was  not  between 
the  parties  to  the  note.  Here,  it  is.  The  fact  that  the  suit  is 
not  between  the  original  parties  to  the  note  and  agreement  does 
not  affect  the  question,  since  the  plaintiff  acquired  his  title  with 
notice,  and  stands  in  the  shoes  of  the  original  payee. 

The  second  defense  is  based  upon  the  alleged  fraud  of  McElroy 
in  obtaining  the  defendant's  signature  to  the  note  by  fraudulent 
representations  as  to  the  value  of  the  oats.  As  it  is  also  averred 
that  the  plaintiffs  took  the  note  with  knowledge  of  the  fraud,  the 
facts  averred  certainly  constitute  a  defense,  and  the  demurrer 
should  have  been  overruled.  Neither  of  these  defenses  show  that 
the  maker  was  a  party  to  any  contemplated  fraud  upon  the  public. 
If  the  averments  be  true,  and  they  are  admitted  by  the  demurrer, 
he  was  simply  deceived  into  the  belief  that  money  could  honestly 
be  made  out  of  the  introduction  of  a  new  variety  of  oats,  and  the 
assumption  that  he  was  a  party  to  any  contemplated  fraud  on 
others  at  the  time  he  executed  the  note  is  inconsistent  with  the 
averments  of  his  answer.  But  if  the  assumption  were  true,  still 
the  illegal  character  of  the  consideration  might  be  pleaded  as  a 
defense  by  the  maker  to  an  action  on  the  note  by  the  other  party, 
or  any  holder  of  it  with  notice.  Complicity  in  a  wrong  may 
defeat  a  party  who,  by  action,  seeks  to  enforce  an  executory  con- 
tract based  upon  it,  or  to  obtain  affirmative  relief  against  the 
contract,  as  by  injunction  or  cancellation ;  but  such  complicity 
does  not  preclude  a  defendant  fi-om  pleading  the  facts  as  a 
72 


CH.  III.]      AGREEMENTS    CONTROLLING    OPERATION.     ILL.  CAS. 

defense,  although  he  may  he  in  jxiri  delicto.  Roll  ^J.  Raguet,  4 
Ohio,  400  ;  McQuade  v.  Rosecrans,  36  Ohio  St.  442  ;  Kahu  v. 
Walton,  46  Ohio  St.  195,  20'J  ;  20  N.  E.  Rep.  203. 

Judgment  reversed,  and  cause  remaudv  d  to  the  court  of  com- 
mon pleas,  with  directions  to  overrule  the  demurrer,  and  for 
further  proceedings. 


Effect  of  Contemporary  Agreement  as  to  time  of  Pay- 
ment, where  Noue  is  Stipulated,  in  Instrument. 

Horner  v.  Horner,  U5  Pa.  St.  258  (23  A.  441). 

McCoLLUM,  J.  The  contest  in  this  case  is  between  the  maker 
and  payee  of  the  note  in  suit.  The  note  is  therefore  subject  to 
any  equitable  defense  or  set-off  which  the  maker  has  against  it. 
If  it  was  executed  and  delivered  upon  and  ns  jiart  of  the  agree- 
ment set  out  in  the  altldaviis,  the  terms  of  the  agreement  and  the 
damages  resulting  from  a  breach  of  it  are  matte -s  proper  to  be 
considered  in  this  action.  As  no  time  is  meniioned  in  the  note 
for  its  payment,  the  legal  inference  is  that  it  is  i)ayable  on  de- 
mand;  but  this  inference  may  be  rebutted  by  proof  of  a  con- 
temporaneous parol  agreement  fixing  the  time  for  the 
payment  of  it.  Ross  v.  P^spy,  66  Pa.  St.  481.  Such 
agreement  is  not  in  contradiction  to  the  terms  of  the 
Avritten  instrument;  it  only  prevents  the  implicntion  raised  by 
the  law  in  the  absence  of  uuy  agreement  as  to  the  time  of  pay- 
ment. The  evidence  of  it  is  not,  therefore,  in  violation  of  the 
rule  which  forbids  the  introduction  of  oral  testimony  to  desti'oy, 
contradict,  or  vary  the  terms  of  a  written  contract.  It  is  also 
well  settled  in  Pennsylvania  that  a  written  instrument  obtained  on 
the  faith  of  a  contemporaneous  parol  agreement  cannot  be  en- 
forced in  violation  of  such  agreement.  'J  he  attempt  to  so  use 
it  subjects  the  writing  to  modification  or  contra<liction  by  parol 
ev  dence  of  what  occurred  at  its  execution.  It  view  of  these 
princii)les,  we  think  the  aflldavits  of  the  8th  and  20th  of  May 
contain  a  valid  answer  to  the  ap[)ellee's  claim.  But  it  is  alleged 
that  they  were  not  presented  in  time,  and  that  the  judgment  was 
properly  entered  for  want  of  an  affidavit  of  defense.  If  this  is 
so,  tiie  judgment  must  stau'l,  because  we  cannot  review  t'le 
action  of  tiie  court  in  refusing  to  take  off  a  judgment  so  entered. 
We  may  think  that  the  court,  in  the  exercise  of  a  sound  discre- 
tion, niiiiht  pro^<erly  have  set  aside  the  judgment,  and  al.ow»d 
the  ai)pellant  to  present  her  defense  to  a  jury;  but  th's  alone 
would  nut  justify  a  reversal  for  denying  her  motion  to  take  it  off. 
It  must  be  a  palpable  abuse  of  discretion  which  will  warrant  our 
interfercnc  e  in  such  a  matter.  We  inqui-e,  then,  whether  it  was 
the  duty  of  the  appellant,  under  the  rules  of  court,  to  answer 
the  ap[)ellee's  claim  by  affidavit,  and,  if  so,  wheiher  she  was  in 
default  at  the  time  the  judgment  was  entered.  There  are  three 
rules  of  court  which  relate  to  the  subject,  and  these  we  will  con- 

73 


ILL.   CAS.    AGREEMENTS    CONTUOLLING    OPEUATION.      [ciI.  III. 

sidrr  ia  the  order  of  their  adoption.  The  first  jtrovides  that 
wlien  the  defendant  appeals  from  the  judgment  of  a  justice  of  the 
peace  he  shall,  at  the  time  of  filing  the  transcript,  enter  and  serve 
a  rule  on  the  plaintiff  to  declare  in  30  days  from  the  first  day  of 
the  terra  to  which  the  transcript  is  filed,  and  tliat  the  plaintiff 
shall  give  notice  to  the  defendant  of  the  filing  of  the  narr.,  and 
to  plead  in  30  days.  The  second  rule  is,  in  terms,  alternative  to 
the  first,  and  provides  that  the  transcript  may  be  treated  as  the 
narr.,  and  within  30  days  from  the  filing  of  it  by  the  defendant 
he  shall  plead  to  it.  The  third  rule  makes  the  pleadings  and  the 
proci'dure  on  appeals  from  the  judgments  of  justices  of  the  peace 
the  same  as  in  like  cases  commenced  in  the  court,  but  dispenses 
with  the  filing  of  a  statement  of  claim  other  than  the  transcript, 
unless  the  dtf cndant  enters  a  rule  for  a  more  specific  statement ; 
and  in  such  case,  on  tlie  filing  of  such  statement,  he  "  is  required 
to  reply  thereto  by  affidavit  as  in  the  other  cases."  In  this  case, 
therefore,  the  appellant  might  have  treated  the  transcript  as  a 
7iarr.,  and,  if  she  had  done  so,  she  could  not  have  been  called 
on  for  an  aflSdavit  of  defense.  But  she  elected  to  require  a  more 
specific  statement  of  claim,  and  when  she  received  notice  of  the 
filing  of  it  she  became  hable  to  be  proceeded  against  under  the 
third  rule.  There  is  nothing  confusing  or  inconsistent  in  these 
rules.  They  constitute  an  inlelligible  s)  stem,  under  which  the 
appellant  had  an  option  to  treat  the  transcript  as  the  narr.  or 
compel  a  more  specific  statement  of  claim.  As  she  sought  awd 
obtained  a  more  specific  statement,  it  became  her  duty  to  file  a 
sworn  answer  to  it  within  30  days.  Because  she  did  not  do  this, 
judgment  was  entered  against  her  under  the  rules.  These  rules 
are  not  unreasonable,  and  the  power  of  the  court  to  make  them 
cannot  be  doubted.  We  are  unable  to  find  any  action  on  the 
part  of  the  appellee  which  can  be  construed  into  a  waiver  of  her 
right  to  require  an  affidavit  of  defense.  The  notice  to  plead  was 
compulsory  by  the  terms  of  the  rule  under  which  the  appellant 
proceeded  for  a  more  specific  statement  of  claim,  and  cannot 
operate  as  a  waiver  or  estoppel.  It  may  be  conceded  that  the 
right  to  an  affidavit  of  defense  may  be  waived,  but  a  mere  notice 
to  plead,  when  required  by  tl.e  ride  under  which  the  appellant 
asked  for  a  specific  statement,  is  not  a  waiver.  In  O'Neal  v. 
Rupp,  22  Pa.  bt.  395,  a  rule  to  plead  and  a  rule  to  arbitrate  were 
entered  nearly  four  months  af;er  tiie  affidavit  ()f  defense  was  filed, 
and  subsequently  a  judgment  was  taken  for  want  of  a  sufficient 
affidavit,  and  it  was  held  that  "  a  i)arty  who  intends  to  a~k  for 
judgment  for  the  reason  that  the  affidavit  of  defense  is  defic'ent 
must  do  so  before  he  has  taken  any  steps  in  the  cause,  subsequent 
to  the  affidavit,  calculated  to  mislead  his  opponent."  But  in 
Duncan  v.  Btll,  28  Pa.  St.  516,  this  court  refused  to  hold  that  the 
reference  of  a  cause  to  arbitrators  at  tiie  instance  of  the  plain- 
tiff, and  an  award  in  his  favor  from  wliich  the  defendant  a^jpealed, 
making  the  usual  affidavit  for  that  purpose,  was  a  waiver  on  the 
part  of  the  plaintiff  of  the  right  to  require  an  affidavit  of  defense. 

74 


CH.   III.]      AGREEMENTS    CONTKOLLIXG    OPERATION.    ILL.  CAS. 

The  case,  as  reported,  is  misleading,  because  the  only  point 
decided  was  that  the  affidavit  was  filed  in  time.  We  have  noticed 
these  cases  specifically,  as  they  are  cited  by  the  appellant  in 
support  of  her  claim  of  waiver.  As  we  cannot  agree  with  the 
appellant  that  there  was  a  waiver,  or  that  the  rules  in  question  are 
confusing,  inconsistent,  or  unlawful,  we  are  constrained  to  aflSrm 
the  judgment.     Judgment  affirmed. 

75 


CHAPTER     IV. 

PARTIES  TO  BILLS  A.ND  NOTES. 

Section  33.  Infants. 

34.  Lunatics. 

35.  Drunkards  and  spendthrifts. 

36.  Married  women. 

37.  The  bankrupt  or  nsolvent  payee. 

38.  Alien  enemies. 

39.  Bill  or  note  executed  by  agent.  v 

40.  Form  of  signature  by  agent. 

41.  Partners. 

42.  Form  of  the  firm's  signature. 

43.  Private  corporations. 

44.  Form  of  signature  by  agents  of  corporations. 

45.  Commercial  paper  of  corporations  under  seal. 

46.  Drafts  or   warrants  of  one   officer  of  the  corporation   on 

another. 

47.  Governments. 

48.  Municipal  or  public  corporations. 

49.  Fiduciary  parties  and  personal  representatives. 

§  33.  Infants. —  According  to  the  general  law  of  con- 
tracts, the  contract  of  the  infant  is  voidable,  and  subject 
to  his  ratification,  at  his  option,  on  arrival  at  majority. 
The  only  exception  to  this  rule  is  in  relation  to  his  con- 
tracts for  necessaries,  which  are  absolutely  valid;  i.  e.,  he 
is  liable  for  the  value  of  the  goods  furnished  him  as  neces- 
saries.^ 

In  applying  this  general  law  to  bills  and  notes,  it  is  found 
that  the  bills  and  notes  of  infants  are  always  voidable  by 
them,  even  though  they  are  given  for  necessaries;  for  their 
liability  for  necessaries  is  not  on  the  price  agreed  upon,  but 
ciwihe  qua nlum  tneruit,  and  money  isnever  heldtobe  a  neces- 
sary.^    Where  a  bill  or  note  is  executed  jointly  by  an  adult 

1  See  Lawson  on  Contracts  and  other  treatises  on  Contracts  for  a  full 
treatment  of  these  questions. 

2  Towle  V.  Dresser,  73  Me.  252;  Everson  v.  Carpenter,  17  Wend.  419; 
Alsop  V.  Todd,  2  Root,  109;  Baldwin  v.  Rosier,  1  McCrary,  384;  McMinu 

76 


CII.  IV.]  PARTIES    TO    BILLS    AND    NOTES.  §    34 

and  ail  infant,  it  will  be  binding  on  the  adult  and  voidable 
by  the  infant.^  In  all  cases,  where  the  infant's  note  or  bill  is 
held  to  be  voidable,  and  not  absolutely  void, —  and  this  is 
the  prevailing  rule —  he  may  ratify  the  note  or  bill  on  bis 
arrival  at  majority,  and  thereafter  the  paper  will  be  abso- 
lutely binding  upon  him,  as  if  it  had  never  been  tainted  by 
his  infancy;  and  his  ratification  inures  to  the  benefit  of  all 
subsequent  holders. ^  Where  the  payee  or  indorsee  of  a 
bill  or  note  is  an  infant,  his  indorsement  is  not  binding 
upon  him  ;  so  that  he  may  repudiate  the  same,  and  recover 
on  the  note  or  bill  from  the  primary  obligors  and  prior 
indorsers.  On  the  other  hand,  whoever  makes  a  bill  or 
note  payable  to  an  infant  or  order  or  bearer,  guarantees 
the  capacity  of  the  infant  to  transfer  the  paper  by  indorse- 
ment, or  delivery,  and  is  liable  to  the  subsequent  holder,  who 
receives  it  for  value  from  the  infant  and  without  notice  of 
his  infancy.  Where  the  infant  is  the  payee,  the  maker  of 
the  note  and  acceptor  of  a  bill  are  liable  to  the  subsequent 
bona  fide  holder,  and  they  are  estopped  from  setting  up  the 
infancy  of  the  payee  as  a  defense  to  an  action  by  such  sub- 
sequent holder.  On  the  other  hand,  if  the  infant  should 
disaffirm  his  indorsement  or  transfer  of  the  note  or  bill,  he 
may  likewise  recover  of  the  maker  and  acceptor  respec- 
tively.^ 

§  34.  Lunatics. —  Lunacy  in  a  party  to  a  contract  makes 
the  contract  generally  voidable.     There  is,  however,  a  dis- 

V.  Richmond,  6  Yerg.  9;  Des  Moines  Ins,  Co.  v.  Mclntire  (Iowa,  '97),  68 
N.  W.  665;  Ray  v.  Tubbs,  50  Vt.  688  (27  Am.  Rep.  519);  Buzzell  v.  Ben- 
nett, 2  Cal.  101;  La  Grange  Inst.  v.  Anderson,  63  Ind.  3G7  (30  Am.  Rep. 
472) ;  see  Ayers  v.  Burns,  87  Ind.  245.  The  acceptance  of  a  bill  by  an  in- 
fant is  equally  voidable.     Willamson  v.  Watts,  1  Campb.  552. 

1  Taylor  v.  Dansby,  42  Mich.  82;  Crabtree  v.  May,  1  B.  Mon.  289; 
Slocum  V.  Hooker,  12  Barb.  5G3. 

2  Lawson  v.  Lovejoy,  8  Me.  405  (23  Am.  Dec.  526);  Edgerly  v.  Shaw, 
25  N.  IL  514  (57  Am.  Dec.  349) ;  Ring  v.  Jamison,  66  Mo.  424. 

3  Nightingale  v.  Withington,  15  Mass.  272  (8  Am.  Dec.  101);  Good- 
seJI  V.  Myers,  3  Wend.  479;  Briggs  v.  McCabe,  27  Ind.  327  (89  Am.  Dec. 
60!();  Hardy  v.  Waters,  38  Me.  450;  Hastings  v.  Dollarhide,  24  Cal. 
19.5. 

77 


§   35  PARTIES   TO    BILLS    AND   NOTES.  [CH.  IV. 

position  of  some  of  the  courts  to  hold  that  the  contract  is 
binding  on  the  lunatic,  where  the  other  party  is  ignorant  of 
his  weakness  of  mind,  has  paid  full  value  and  has  not  taken 
advantage  of  his  mental  weakness. ^  The  better  opinion, 
however,  limits  the  liability  of  the  lunatic  on  his  contract 
to  cases,  where  the  contract  or  note  has  been  fully  per- 
formed by  the  other  party,  in  ignorance  of  his  insanity. 
Where  the  contract  is  still  executory,  it  is  held  to  be 
absolutely  void.^  It  is  also  held  that,  where  a  lunatic  has 
been  declared  to  be  insane,  and  he  and  his  property  have 
been  placed  by  order  of  the  court  in  the  care  of  a  committee 
or  guardion,  his  note  or  other  contract  is  absolutely  void.^ 

Where  the  lunatic  is  the  payee  of  a  negotiable  note  or  bill, 
the  same  rule  generally  obtains  as  in  the  case  of  an  infant 
payee,  i.  e.,  that  he  may  avoid  the  indorsement  or  transfer 
of  the  paper,  and  that  the  indorsee  can  recover  of  the 
maker  or  acceptor,  if  he  takes  it  as  a  bona  fide  holder,  for 
full  value  and  without  notice  of  the  insanity  of  the  payee.* 
Where  insanity  occurs  after  the  execution  of  the  note,  al- 
though the  indorsement  may  be  voidable,  the  maker  or 
acceptor  is  not  liable  on  any  guaranty  of  capacity.^ 

§  35.  Drunkards  and  spendthrifts.  —  Drunkenness, 
when  it  is  great  enough  to  make  one  temporarily  bereft  of 

1  Moore  v.  Hershey,  90  Pa.  St.  196;  Lancaster  Co.  Bk.  v.  Moore,  78 
Pa.  St.  407  (21  Am.  Rep.  24) ;  Mutual  Life  Ins.  Co.  v.  Hunt,  79  N.  Y.  541 ; 
Matthieson  v.  McMahan,  37  N.  J.  Eq.  (9  Vroom)  548;  Riggan  v.  Green, 
80  N.  C.  236  (30  Am.  Rep.  77). 

2  Sentance  v.  Poole,  3  C.  &  P.  1 ;  Matthieson  v.  McMahan,  87  N.  J.  Eq. 
(9  Vroom)  548;  Scanlan  v.  Cobb,  85  111.  296.  See  also  Seaver  v.  Phelps, 
11  Pick.  304  (22  Am.  Dec.  372)  ;  Rogers  v.  Blackwell,  49  Mich.  192;  Van 
Patton  17.  Beals,  46  Iowa,  63;  Wilder  v.  Weakley,  34  Ind.  181. 

3  Hovey  v.  Hobson,  53  Me.  45  (89  Am.  Dec.  705) ;  Nichols  v.  Thomas, 
53  Ind.  42;  Wadsworth  v.  Sharpsteen,  8N.  Y.  388;  Jackson  u.  Gumaer, 
2  Cow.  555. 

*  Smith  V.  Marsack,  6  C.  B.  486;  Nat.  Pemberton  Bk.  i\  Porter,  125 
Mass.  333  (28  Am.  Rep.  235).  But  see  Peaslee  v.  Robbing,  3  Met.  164; 
Burke  V.  Allen,  29  N.  H.  106  (61  Am.  Dec.  642). 

5  Alcock  V.  Alcock,  3  Man.  &  G.  268.     See  Moore  v.  Hershey,  90  Pa. 
St.  196 ;  Van  Patton  v.  Beals,  46  Iowa,  62. 
78 


CH.  IV.]  PARTIES   TO   BILLS    AND   NOTES.  §  36 

his  reason,  will  be  a  cause  for  invalidating  the  note  or  other 
contract  made  by  him  in  such  a  condition.  But  it  is  held 
that  the  defense  of  drunkenness  cannot  be  set  up  against 
a  bona  Jide  \io\dev .^  A  drunkard's  note  or  contract  may 
be  ratified  after  his  recovery  from  his  drunken  stupor. ^ 
He  may  also  disaffirm  such  note  or  contract,  except  against 
a  bona  fide  holder  of  negotiable  paper;  but  in  order  to  dis- 
affirm, he  must  restore  the  consideration.^ 

Where  one  has  been  placed  under  guardianship  by  order 
of  a  court,  on  the  ground  of  being  a  spendthrift,  he  is 
deprived  of  the  power  to  make  or  indorse  a  negotiable 
instrument.^ 

§  36.  Married  women. —  At  common  law,  the  legal  per- 
sonality of  the  woman  was  completely  merged  in  that  of  the 
husband  ;  and  with  the  loss  of  her  legal  personality,  she  was 
also  deprived  of  the  control  of  her  property,  and  of  her 
contractual  powers.  The  contract  of  the  married  woman 
was  absolutely  void.  Of  late  years,  in  this  country,  a 
tendency  has  been  manifested  to  break  away  from  these 
common  law  disabilities  of  coverture  ;  and  since  the  legis- 
lative powers  of  the  different  States  are  acting  independ- 
ently of  each  other,  we  naturally  find  the  existing  law,  in 
relation  to  the  property  rights  and  contractual  powers  of 
married  women,  to  vary  in  detail  with  each  State,  in  almost 
all  of  which  is  found  a  more  or  less  decided  variation  from 
the  common  law.  For  these  reasons,  only  a  general  state- 
ment of  the  essential  principles  of  the  common  law  can  be 
given  here,  leaving  the  student  to  ascertain  the  actual  law 

1  state  Bank  v.  McCoy,  G9  Pa.  St.  204  (8  Am.  Rep.  246);  McSparran 
V.  Neely,  91  Pa.  St.  17;  Norlham  v.  Latouche,  4  C.  &  P.  145;  Hale  ». 
Brown,  11  Aia.  87;  Smith  v.  Williamson,  8  Utah,  219  (30  P.  753). 

2  Joest  V.  Williams,  42  Ind.  5155;  Ca'kins  v.  Fry,  35  Conn.  170;  Mat- 
thews V.  Baxter,  L.  K.  8  Exch.  i;]2.  But  see  contra,  Berkley  v.  Canon, 
4  Rich.  l.'iG. 

3  Joest  V.  Williams,  42  Ind.  565;  McGuire  v.  Calahan,  19  Ind.  128. 

*  Manson  v.  Felton,  13  Pick.  206;  Lynch  v.  Dodge,  130  Mass.  458.  As 
to  the  power  of  the  State  to  place  a  spendthrift  under  guardianship, 
see  Tiedcman's  Limitations  of  Police  Power,  §  138. 

79 


§   36  PARTIES    TO    BILLS    AND    NOTES,  [CH.  IV. 

prevailing  in  his  State,  by  a  study  of  the  local  statutes  and 
adjudications. 

The  bill  or  note  of  a  married  woman  was,  according  to 
the  common  law,  absolutely  void,  even  as  against  a  bona 
fide  holder,  whether  she  appeared  as  a  maker,  drawer,  ac- 
ceptor or  indorser.i  And  so  completely  void  was  the  mar- 
ried woman's  note  or  bill,  that  her  ratification  after  her  hus- 
band's death  was  not  binding  upon  her,  unless  it  was  sup- 
ported by  a  fresh  consideration. ^  Where  a  woman  became 
a  party  to  a  bill  or  note  before  marriage,  her  husband  was  at 
common  law  held  liable,  wiiere  suit  was  brought  on  such  note 
or  bill  during  the  coverture.  But  his  liability  did  not  sur- 
vive the  wife.  In  such  a  case,  the  suit  had  to  be  brought 
against  the  wife's  personal  representatives.^  Where  she 
was  the  payee  of  a  note  or  bill,  her  husband  had  the  power 
to  receive  and  enforce  payment ;  but  if  he  did  not  reduce 
it  to  possession,  i.  e.,  collect  it  during  the  coverture,  he  lost 
all  control  over  the  note  or  bill.  If  the  wile  survived  the 
husband,  it  became  her  absolute  property  again;  and  if 
she  died  during  coverture,  her  personal  representatives,  and 
not  the  husband,  were  entitled  to  receive  payment.*  She 
could  not  make  good  title  by  her  sole  indorsement.  Her 
indorsee  got  no  title  when  indorsed  during  coverture, 
unless  her  husband  joined  in  the  indorsement,  or  gave  his 
consent  to  the  transfer  in  some  other  manner.^ 

1  Masoa  v.  Morgan,  2  Ad.  &  EL  30;  Kenworthy  v.  Sawyer,  125  Mass. 
28;  Bloomingdale  v.  Lisburger,  24  Hun,  355;  Kenton  Ins.  Co.  v.  McClel- 
lan,  43  Mich.  5G4;  Higgins  v.  Willis,  35  Ind.  371;  Robertson  v.  Bruner, 
24  Miss.  C2  Cushm.)  242;  Comings  v.  Leedy,  114  Mo.  454  (21  S.  W.  804). 

2  Littlefleld  v.  Shee,  2  B.  &  Ad.  811;  Porterfleld  v.  Butler,  47  Miss. 
165  (12  Am.  Rep.  329);  Watkins  v.  Halstead,  2  Sandf.  311;  Vance  v. 
Wells,  6  Ala.  737. 

3  Mitchinson  v.  Hewson,  7  T.  R.  348;  Cureton  v.  Moore,  2  Jones  Eq. 
204;  Morrow  V.  Whitesides,  lOB.  Mon.  411. 

4  Legg  V.  Legg,  8  Mass.  99;  Dean  v.  Richmond,  5  Pick.  461;  Story 
».  Baird,2  Green  (N.  J.),  262;  Allen  v.  Wilkins,  3  Allen,  321;  Haywood  u. 
Haywood,  20  Pick.  517;  Driggs  v.  Abbott,  27  Vt.  580  (Go  Am.  Dec.  214). 

*  Savage  v.  King,  17  Me.  301;   Shuttlesworth  v.  Noyes,  8  Mass.  229; 
Stevens  v.  Beals,  10  Cush.  291  (57  Am.  Dec.  108)  ;  Menkens  u.  Heringhi,  17 
Mo.  297;  Hemmingway  v,  Matthews,  10  Tex.  207;  Hamilton  v.  Brooks, 
80 


CH.  IV.]  PARTIES    TO   BILLS    AND    NOTES.  §  37 

An  exception  arose,  at  an  early  day,  to  the  common  law 
disability  of  married  women,  where  she  had  an  equitable 
separate  estate.  Under  the  rules  of  equity,  where  an 
equitable  estute  was  granted  to  a  married  woman,  for  her 
sole  and  separate  use^  the  English  and  most  of  the  Amer- 
ican courts  held  that,  in  respect  to  such  separate  estate, 
she  was  possessed  of  all  the  powers  of  a  single  woman. ^ 
As  a  result  of  this  repudiation  of  the  common  law  disabil- 
ity of  coverture,  it  became  at  an  early  day  a  commonly 
accepted  doctrine  that  the  contracts  of  a  married  woman, 
including  notes  and  bills,  which  were  made  by  her  in  reli- 
ance upon  her  separate  property,  and  specially  for  the 
benefit  of  such  separate  estate,  were  valid  obligations  as 
liens  upon  her  separate  estate;  although  they  were  not 
binding  upon  her  individually,  and  independently  of  the  sep- 
arate estate.  In  order  to  make  such  a  contract  binding  as 
a  lien  on  her  separate  estate,  the  intention  to  charge  her 
separate  estate  must  be  proven.  Where  the  contract  was 
made  for  the  benefit  of  the  estate,  the  intention  to  charge 
was  implied;  in  all  other  cases,  it  had  to  be  proven  affirma- 
tively. In  many  States,  where  she  has  a  separate  estate, 
every  contract  is  presumed  to  have  been  intended  as  a 
charge  upon  her  separate  estate  ;  while  in  others,  that  in- 
tention must  be  shown  by  affirmative  proof.  Where  the 
law  is  so  variable,  a  citation  of  a  few  cases  would  be  of  no 
service,  and  there  is  no  room  for  a  full  citation  of  authori- 
ties. Hence  the  reader  is  referred  to  the  adjudications  of 
his  own  State. 

§  37.  The  bankrupt  or  insolvent  payee. —  When  an 
insolvent  person  goes  into  bankruptcy,  all  his  property 
passes  to  his  assignee,  and,  of  course,  his  bills  and  notes 
receivable  are  thereafter  only  collectible  by  his  assignee. 
He  cannot  thereafter  make  a  valid  transfer  of  each  a  bill  or 

51  Tex.  142;  Miller  v.  Delaniater,  12  Wend.  433  (indorsement  by  wife  in 
her  maiden  name,  with  husband's  consent) ;  Mudge  v.  Bullocli,  83  111.  22 ; 
McClain  v.  Weideraeyer,  25  Mo.  364. 
1  See  Tiederaan  Real  Prop.,  §  469. 

0  81 


§   39  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

note,  unless  he  has,  prior  to  his  bankruptcy,  made  a  valid 
contract  for  its  transfer,  when  he  can  complete  it  subse- 
quently by  indorsement  or  delivery.^  If,  however,  one 
should  make  a  bill  or  note  payable  to  a  bankrupt,  he  can- 
not deny  the  payee's  capacity  to  make  a  legal  indorsement, 
and  the  indorsee  can  bring  suit  on  the  paper. ^ 

§  38.  Alien  enemies. —  The  fact,  that  one  of  the  par- 
ties to  a  note  or  bill  is  an  alien,  does  not  affect  its  validity. 
But  if  he  is  an  alien  enemy,  by  the  common  international 
law  of  the  civilized  world,  the  paper  is  declared  to  be  abso- 
lutely void.  All  bills  of  exchange  and  promissory  notes, 
negotiated  between  persons,  whose  countries  are  then  at 
war  with  each  other,  are  void,  it  matters  not  in  what  charac- 
ter the  alien  enemy  appears  as  a  party  to  the  instrument ; 
whether  as  maker  or  payee  of  a  note,  or  as  drawer,  drawee 
and  acceptor,  or  payee  of  a  bill.  This  principle  was  ap- 
plied in  numerous  cases  to  bills  and  notes  which  were 
negotiated  between  citizens  of  the  United  States  and  of  the 
Confederate  States,  during  the  great  American  Civil  War.' 
The  only  exception  to  this  rule,  which  appears  to  be  gen- 
erally recognized,  is  where  a  bill  is  drawn  by  a  citizen  of 
one  country  on  an  alien  enemy  in  favor  of  another  alien 
enemy  .^ 

§  39.  Bill  or  note  executed  by  agent. —  The  power  of 
one  to  appoint  an  agent  and  inve.--t  him  with  the  authority  to 
act  for  him  and  in  his  name,  is  one  that  is  conceded  by  the 
law  of  the  civilized  world  to  be  applicable  in  all  the  con- 
tractual relations  of  life,  with  the  exception  of  two,  the 

1  Hersey  v.  Elliott,  67  Me.  526  (24  Am.  Rep.  50) ;  Hughes  v.  Nelson,  28 
N.  J.  Eq.  (2  Stew.)  547;  First  Nat.  Bank  v.  Gish,  72  Pa.  St.  13;  Jerome 
V.  McCarter,  94  U.  S.  734. 

2  Dayton  v.  Dale,  2  B.  &  C.  293. 

3  Hanger  r.  Abbott,  6  Wall.  540;  Phillips  v.  Hatch,  1  Dill.  571 ;  Woods 
V.  Wilder,  43  N.  Y.  164  (3  Ara  Rep.  684);  Tarletoa  v.  Southern  Bank, 
49  Ala.  229;  Lacy  v.  Sugarman,  12  Heisk.  354;  McVeigh  v.  Bank  of  the 
Old  Dominion,  26  Gratt.  785;  Williams  v.  Mobile  Sav.  Bank,  2  Woods, 
601. 

*  Haggard  v.  Conkwright,  7  Bush,  16  (3  Ara.  Rep.  297). 

82 


CH.  IV.]  PARTIES    TO    BILLS    AND    NOTES.  §   39 

solemnization  of  marriage  ^  and  the  execution  of  wills.  It 
is  certainly  an  universal  rule  that  hills,  notes  and  checks, 
as  well  as  other  kinds  of  Commercial  Paper,  may  be  exe- 
cuted by  agents;  and  when  so  exercised  by  authority  of  the 
principal,  express  or  implied,  and  in  his  name,  the  princi- 
pal will  be  bound  by  the  bill,  note  or  check,  as  if  he  had 
executed  it  himself.  The  general  law  of  agency  will  na- 
turally not  be  presented  here  in  full,  and  it  will  be  treated 
only  so  far  as  it  is  necessary  to  an  understanding  of  the 
validity  of  bills  and  notes,  when  they  are  executed  by 
agents. 

In  order  that  one  may  act  as  an  agent  for  another,  it  is 
necessary  that  he  shall  have  sufficient  understanding  to 
comprehend  the  nature  of  his  duties.  For  that  reason, 
insane  people,  and  infants  not  having  arrived  at  the  age  of 
discretion,  cannot  act  as  agents.  But  the  disal)ilities  of 
infancy,  coverture,  and  the  like,  which  would  incapacitate 
one  from  making  a  valid  contract  for  oneself,  would  not 
disqualify  him  or  her  from  acting  as  the  agent  of  another, 
if  the  actual  mental  capacity  was  sufficient  to  enable  a  rea- 
sonably intelligent  exercise  of  the  i)ower.-  And  the  wife, 
although  absolutely  incapacitated  at  the  common  law  to 
make  a  contract  in  her  own  name,  is  able,  when  duly 
authorized,  to  make  a  valid  bill  or  note  as  the  agent  of  her 
husband.^ 

But  in  every  case,  where  one  undertakes,  as  agent  of 
another,  to  make  a  note,  draw  or  accept  a  bill,  or  to  indorse 
either  ;  in  order  that  the  act  of  the  agent  may  be  binding 
upon  the  principal,  the  authority  to  act  in  that  capacity  as 
an  agent  must  be  proven,  either  by  express  grant  of  the 
power,  or  l)y  implication  of  the  law  from  the  creation  of  a 
general  agency,  or  the  express  grant  of  some  other  power, 
the  exercise  of  which  requires  the  exercise  of  the  power  to 
sign  the  principal's  name  to  negotiable  instruments. 

'  I  bt'lieve,  however,  that  in  some  countries  niarriaj^e  may  he  solem 
ni/.ed  i)y  proxy. 

2  Tiedeman  Com.  Taper,  §  73. 

3  Tiedeman  Com.  Paper,  §  74. 

83 


§   39  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

Where  the  power  to  execute  or  indorse  a  bill  or  note,  or 
to  accept  a  bill,  is  expressly  given,  it  need  not  be  in  writing, 
unless  the  local  statute  requires  the  power  of  attorney  to  be 
reduced  to  writing;  and  it  is  believed  that  the  statutes  do 
not  generally  require  a  written  authority.  The  authority 
may  be  given  by  parol. ^  The  more  common  cases  for 
litigation  are  those,  in  which  the  power  to  issue  or  indorse 
negotiable  paper  is  held  to  be  implied  from  the  express 
grant  of  some  other  power.  But  an  express  authority  to 
sign  the  name  of  the  principal  to  a  contract  is  strictly 
construed,  and  will  not  be  enlarged  by  implication,  unless 
the  alleged  implied  authority  is  plainly  necessary  to  the 
full  performance  of  the  express  duty  or  authority.  This 
is  a  general  rule  of  the  law  of  agency ;  but  it  is  more 
strictly  enforced  in  the  case  of  bills  and  notes  and  other 
negotiable  instruments. 

Generally,  the  power  to  issue  bills  and  notes,  or  to  make 
the  principal  a  party  to  them  in  any  character  whatever, 
will  not  be  implied  from  the  authority  of  the  agent  to 
transact  business  in  the  name  of  principal,  in  the  perform- 
ance of  which  duty,  the  bill  or  note  would  be  convenient, 
but  not  absolutely  necessary.  Thus,  a  power  to  buy  goods 
does  not  imply  the  power  to  give  a  note  in  payment  of  the 
price. 2  And  even  where  the  agent  is  acting  under  a  gen- 
eral power  of  attorney,  to  transact  all  business  of  every 
kind,  it  seems  to  be  generally  held  that  the  power  to  make 
the  principal  a  party  to  a  bill  or  note  (except,  probably,  as 
an  indorser  for  collection)  is  not  implied.^  The  power  to 
execute  bills  and  notes  must  be  expressly  given. 

1  Tiedeman  Com.  Paper,  §75;  Forsyth  v.  Day,  46  Me.  176;  Humphreys 
V.  Wilson,  43  Miss.  328;  Handyside  v.  Cameron,  21  111.  588  (74  Am.  Dec. 
119. 

2  Taber  v.  Cannon,  8  Met.  456;  Temple  v.  Pomroy,  4  Gray,  128;  Bank 
of  Hamburg  v.  Johnson,  3  Rich.  42;  State  of  Wisconsin  v.  Torinus,  24 
Minn.  332;  Hogarth  v.  Wherley,  L.  R.  10  C.  P.  530.  But  see  Nutting  v. 
Sloan,  69  Ga.  392,  where  a  draft  on  a  principal  by  an  agent  for  goods 
bought  was  held  to  be  within  the  implied  power  of  the  agent. 

3  Thompson  v.  Bank  of  British  N.  Am.,  82  N.  Y.  1;  Robinson  v.  Chem- 
ical Nat.   Bank,  86  N.   Y.   407  (indorsement  of  check) ;  Washburn  v, 

84 


CH.   IV.]  PARTIES    TO    BILLS    AND    KOTES.  §   39 

And  so,  also,  where  the  principal  gives  the  agent  an 
express  authority  to  sign  his  name  to  negotiable  instru- 
ments, the  authority  is  very  strictly  construed  and  will  not 
generally  be  enlarged  by  implication.  Thus,  a  power  to 
make  notes  will  not  be  construed  to  include  the  power  to 
make  bills,  or  vice  versa.  Nor  will  a  power  to  accept  a 
bill  be  implied  from  a  power  to  draw  one;  nor  the  power, 
to  indorse  a  bill  or  note,  be  implied  from  a  power  to  accept 
one  in  payment.  From  the  express  grant  of  any  one  of 
these  powers,  the  others  are  never  implied. ^  So,  also, 
where  an  authority  is  given  to  sign  a  note  payable  at  a 
particular  bank,  it  does  not  include  an  authority  to  make  a 
note  payable  elsewhere. ^  In  fact,  all  the  limitations,  which 
are  imposed  by  the  principal  in  the  grant  of  a  special  author- 
ity, must  be  observed  ;  and  a  note  or  bill,  executed  in 
violation  of  those  limitations  in  any  material  matter,  will 
not  bind  the  [)rinci[)al.^ 

But  where  the  general  authority  is  given  to  an  agent  to 
issue  bills  and  notes  and  indorse  the  same,  in  the  transac- 
tion of  the  business  of  the  principal,  the  principal  will  be 
bound  by  all  obligations  of  that  kind  a^^sumed  by  the 
agent,  even  though  they  are  made  in  violation  of  express 
private  instructions.* 

It  may  be  stated,  probably  without  any  qualification 
whatever,  that  in  no  case  will  the  agent  be  held  to  have  the 
implied  power  to  bind   the  principal  by  the  execution  or 

Alden,  5  CaL  463;  Thompson  v.  Elliott,  73  111.  221;  Ryhiner  v.  Feickert, 
92  111.  305  (34  Am.  Rep.  130). 

1  School  Dist.  V.  Sipley,  54  111 .  284 ;  First  Nat.  Bank  v.  Gay,  63  Mo. 
33  (21  Am.  Rep.  430);  Nash  v.  Mitchell,  71  N.  Y.  199  (27  Am.  Rep.  38). 

-  Craighead  v.  Peterson,  72  N.  Y.  279  (^28  Am.  Rep.  150). 

3  Batley  v.  Carswell,  2  Johns.  48;  Nixon  v.  Palmer,  8  N.  Y.  398 
(note  authorized  for  a  particular  purpose);  Adams  u.  Flanagan,  30  Vt. 
412;  Bank  of  Deer  Lodge  v.  Hope  Min.  Co.,  3  Mont.  146  (35  Am.  Rep. 
458).  See  Tate  v.  Evans,  7  Mo.  419;  Bank  of  State  of  S.  C.  v.  Herbert, 
4  McCord,  89,  in  which  the  variations  from  the  express  directions  of  the 
principal  were  immaterial,  and  hence  the  principal  was  held  bound. 

4  Mann  v.  King,  6  Munf.  428;  Sykes  v.  Giles,  5  M.  &  W.  645;  Withing- 
ton  V.  Herring,  5  Bing.  442;  Commercial  Bank  of  Lake  Erie  v.  Norton,  I 
Hill,  501. 

85 


§   39  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

indorsement  of  accommodation  paper  to  any  one,  who  takes 
the  paper  with  knowledge  of  its  real  character.^ 

The  power  of  an  agent,  to  bind  his  principal  by  the 
execution  or  indorsement  of  negotiable  instruments,  may 
also  be  implied  from  his  appointment  to  an  office  or  official 
position,  where  one  of  the  implied  powers  of  the  incum- 
bent is  to  act  in  that  capacity  for  the  person  or  corporation 
who  is  his  principal.  The  cashier  of  a  bank  or  banking 
house  is  a  notable  instance  of  an  officer  having  such  an  im- 
plied power. ^ 

The  unauthorized  execution  or  indorsement  of  a  note  or 
bill  by  an  agent  may  be  subsequently  ratified,  either  ex- 
pressly, or  by  implication  from  the  principal's  acceptance 
of  the  proceeds  of  the  transaction,  with  knowledge  of  the 
unauthorized  act.^  And  where  the  principal  has  repeatedly 
ratified  the  unauthorized  issue  of  bills  and  notes  by  the 
agent,  one  who  relies  upon  the  implication,  from  these 
acknowledgments  of  the  prior  unauthorizt'd  acts  of  the 
agent,  that  the  agent  had  the  power  to  sign  bills  and  notes 
for  the  principal,  may  hold  such  principal  liable  on  the 
principal  of  estoppel.*  The  agent  guarantees  to  the  party 
dealing  with    him    his    power  to  act    for  and  to  bind  his 

1  Stainer  v.  Tyson,  3  Hill,  279;  NorLh  River  Bank  v.  Aymer,  3  Hill, 
262;  German  Nat.  Bank  v.  Studley,  1  Mo.  App.  260;  West  St.  Louis  Bank 
V.  Shawnee  Bank,  95  U.  S.  557. 

2  Minor  v.  Mechanics'  Bank  of  Alexander,  1  Pet.  46;  Baldwins.  Bank 
of  Newbury,  1  How.  234;  Ballston  Spa.  Bank  u.  Marine  Bank,  16  Wis. 
120;  Barnes  v.  Ontario  Bank,  19  N.  Y.  156;  Cook  v.  State  Nat.  Bank,  52 
N.  Y.  98  (11  Am.  Rep.  667);  Corser  v.  Paul,  41  N.  H.  24  (77  Am.  Dec. 
753)  ;  State  Bank  v.  Kain,  1  111.  75. 

3  Supervisors  v.  Schenck,  5  Wall.  784;  Croswell  v.  Lanahan,  101  U.  S. 
347;  Eadie  v.  Ashbaugh,  44  Iowa,  519;  Bell  v.  Wandby,  4  Wash.  St.  743 
(31  P.  18)  ;  Turner  v.  Wilcox,  54  Ga.  593;  First  Nat.  Bank  v.  Ballou,  49 
N.  Y.  155;  Roberts  v.  Morrison,  75  Iowa,  321  (39  N.  W.  519)  ;  First  Nat. 
Bank  v.  Gay,  63  Mo.  33  (21  Am.  Rep.  430);  Episcopal  Charitable  Soc.  v. 
Dedhara  Episcopal  Church,  1  Pick.  372.  See  Henry  v.  Heeb,  114  Ind.  275 
(16  N.  E.  606),  for  a  distinction  between  ratification  of  a  forgery  and  of 
an  unauthorized  signature. 

*  Prescott  V.  Flinn,  2  Moore  &  S.  22;   Stroh  v.  Hinchman,  37  Mich, 
490;   Hammond  v.  Varian,  51  N.  Y.  ?93;   Abell  v.  Seymour,  6  Hun,  656; 
Greenfield  Bank  v.  Crafts,  2  Allen,  269. 
86 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  §   40 

principal;  and  so,  where  he  signs  his  principal's  name  with- 
out authority  to  a  bill  or  note,  he  is  liable  to  the  person 
dealing  with  him  for  damages  suffered  by  the  latter,  even 
though  he  acted  innocently  and  under  the  bona  fide  but 
wrong  impression,  that  he  had  sufficient  authority.^ 

§  40.  Form  of  signature  by  agent.  —  When  the  agent 
signs  a  note  or  bill  for  his  principal,  he  should  write  the 
name  of  his  principal  and  then  add  his  own  as  agent,  viz. : 
A;  (i)rincipal)  by  B.  (agent).  This  is  universally  con- 
sidered as  the  only  true  correct  form  of  signature.  But  it 
is  not  absolutely  necessary  to  the  validity  of  the  instrument 
as  the  obligation  of  the  principal,  that  the  signature  should 
be  in  this  exact  form.  Although  it  was  held  at  one  time 
to  be  ambiguous  and  doubtful,  it  is  now  very  generally  held 
that  the  liability  of  the  principal  will  attach  to  a  paper 
which  is  signed  by  the  agent  "  for  "  the  principal,  i.e.: 
B.  (agent)  for  A.  (principal).  Both  names  are  upon  the 
paper,  and  the  intention  of  the  agent  to  act  only  for  and 
in  the  name  of  his  principal  would  seem  to  be  made  clear 
enough  by  such  a  signature.^  Although  it  is  advisable  for 
the  agent  to  affix  his  name  to  the  signature,  it  is  not  at  all 
necessary  to  the  validity  of  the  instrument  as  the  obliga- 
tion of  his  principal,  if  he  has  the  authority  of  the  princi- 
pal to  sign  the  latter' s  name.^     But  when  the  agent  signs 

1  Ballou  V.  Talbot,  16  Mass.  461  (8  Am.  Dec.  146) ;  Bartlett  v.  Tucker, 
104  Mass.  336  (6  Am.  Rep.  240)  ;  Taylor  v.  Shelton,  30  Conn.  122:  Feeter 
V.  Heath,  11  Wend.  479;  White  v.  Madison,  26  N.  Y.  116;  Dodd  v. 
Bishop,  30  La.  Ann.  1178;  Hallu.  Crandall,  29  Cal.  567  (89  Am.  Dec.  64); 
Bryson  v.  Lucas,  84  N.  C.  680  (37  Am.  Rep.  634).  But  if  the  third  party 
dealing  with  him  knew  of  the  agent's  want  of  authority,  he  cannot 
recover  of  the  agent,  particularly  where  the  latter  had  acted  in  good 
faith.  Whitney  y.  Wyman,  101  U.  S.  392;  Jefts  v.  York,  10  Cush.  392. 
See  Hall  v.  Lauderdale,  46  N.  Y.  75. 

2  Bank  of  Genessee  v.  Patchin  Bank,  9  N.  Y.  315;  Mnssey  v.  Scott,  7 
Cush.  215  (54  Am.  Dec.  719);  Rauey  v.  Winter,  37  Ala.  277;  Eckhart  v. 
Reidel,  16  Tex.  62;  Kimball  v.  Bittner,  62  Pa.  St.  203;  Houghton  v.  First 
Nat.  Bk.,  26  Wis.  663  (7  Am.  Rep.  107). 

3  Brigham  b.  Peters,  1  Gray,  139;  Mechanics'  Bank  u.  Bank  of  Colum- 
bia, 5  Wheat.  326;  Odd  Fellows  v.  First  Nat.  Bank,  42  Mich.  461 ;  First 
Nat.  Bank  v.  Gay,  63  Mo.  33  (21  Am.  Rep.  430). 

87 


§  40  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

his  own  name  without  adding  the  name  of  the  principal  for 
whom  he  is  acting  as  agent,  he  is  bound,  on  the  paper,  in- 
dividually, although  he  affixes  to  his  signature  the  word 
"  agent."  Such  a  suffix  is  deemed  to  be  a  mere  descriptlo 
personce,  and  does  not  constitute  any  notice  of  the  agency 
to  the  holder  or  indorsee.^  And  the  same  rule  holds, 
where  a  note  or  bill  is  made  payable  to  one,  who  is  de- 
scribed as  agent,  but  the  principal's  name  is  not  given. 
The  agent  is  individually  liable  on  his  indorsement.^ 

While  it  is  a  general  rule  of  the  law  of  contracts,  as  well 
as  of  the  law  of  Bills  and  Notes,  that  an  agent  is  bound 
personally  on  a  written  contract,  which  he  signs  himself, 
adding  to  his  own  signature  the  word  "  agent,"  without 
disclosing  the  name  of  the  principal,^  a  disposition  on  the 
part  of  the  courts  has  been  manifested  in  the  case  of 
commercial  paper  to  so  far  relax  the  rule,  as  to  hold  that 
when  a  bill  is  made  payable  to  one  as  agent,  he  may  indorse 
it  as  agent,  without  personal  liability  as  an  indorser;  and  he 
may  show  by  parol  evidence  who  is  the  principal,  although 
his  name  does  not  appear  in  the  main  body  of  the  note  or 
bill  or  in  the  indorsement.^ 

In  all  such  cases  of  undisclosed  principals,  the  holder 
has  his  election,  whether  to  hold  liable  the  agent  or  the 
principal  when  he  is  discovered.  If  he  elects  to  hold  the 
principal,  the  agent  is  discharged  of  all  liability.  And 
where  the  holder  of  a  bill  or  note,  signed  by  "  A.  agent," 

1  Williams  v.  Robbins,  16  Gray,  77  (77  Am.  Dec.  396);  Bartlett  v. 
Hawley,  120  Mass.  92;  Hall  v.  Bradbury,  40  Conn.  32;  Collins  v.  Buckeye 
State  Ins.  Co.,  17  Oliio  St.  215;  Toledo  Agri.  Works  v.  Heisser,  51  Mo. 
128;  Bryson  v.  Lucas,  84  N.  C.  280  (37  Am.  Rep.  634);  Thurston  v. 
Mauro,  1  Gr.  (Iowa)  231 ;  Trustees  of  Cahokia  v.  Rautenberg,  88  111.  219. 

2  Bishop  V.  Rowe,  71  Me.  263;  Brown  v.  Ames,  61  N.  W.  448;  59  Minn. 
476;  Toledo  Agr.  Works  v.  Heisser,  51  Mo.  128.  See  contra,  that  in- 
dorsement as  agent  indicates  intention  to  indorse  without  recourse, 
Mott  V.  Hicks,  1  Cow.  533. 

3  Bass  V.  O'Brien,  12  Gray,  477;  Pease  v.  Pease,  35  Conn.  131  (95  Am. 
Dec.  225);  Dykers  v.  Townsend,  25  N.  Y.  57;  Kenyon  v.  Williams,  19 
Ind.  45;  Junge  v.  Bowman,  72  Iowa,  648  (34  N.  W.  612). 

*  Greeny.  Skell,  2  Hun,  485;  Moore  u.  McClure,  8  Hun,  558;  May  ». 
Hewitt,  33  Ala.  161;  Hypes  v.  Griffin,  89  111.  134  (31  Am.  Rep.  71). 

88 


CH.  IV.]  PARTIES    TO    BILLS    AND    NOTES.  §   41 

knows  whcD  he  takes  the  paper,  for  whom  A.  is  acting  as 
the  principal,  he  is  held  to  have  elected  to  hold  the  agent, 
and  he  cannot  thereafter  hold  the  principal.  But  if  he  dis- 
covers afterwards  who  the  principal  is,  lie  has  his  right  of 
election  between  the  two.^  Where  a  paper  is  payable  to 
an  agent,  the  principal,  by  proving  his  title  to  the  paper,  can 
recover  of  the  parties  liable  on  the  same.  But  a  bona  fide 
holder,  by  indorsement  from  the  agent,  cannot  be  affected 
by  such  a  claim  of  ownership  of  the  undisclosed  principal.'* 

§  41.  Partners  as  parties. —  When  two  or  more  persons 
form  a  partnership  for  the  transaction  of  a  business  or 
prosecution  of  a  common  venture, —  unless  one  or  more  of 
them,  by  agreement  of  the  parties,  assume  to  the  firm  the 
character  and  limitations  of  dormant  or  silent  partners, — 
all  of  them  are  impliedly  made  agents  of  the  firm  ;  and  any 
one  of  the  active  partners  may  bind  the  firm  by  the  con- 
tracts which  he  makes  with  others  in  the  name,  or  for  the 
benefit,  of  the  firm.  But  the  implied  authority  of  the 
partner,  to  bind  the  firm  by  his  contracts,  is  limited  to  those 
which  relate  to  the  business  of  the  firm,  and  which  are 
reasonably  necessary  to  the  prosecution  of  the  firm's  bus- 
iness. If  the  contract,  although  made  in  the  name  of  the 
firm,  is  made  for  the  benefit  of  the  partner  individually,  or 
it  relates  to  a  business  wholly  foreign  to  the  partnership 
venture,  the  firm  is  not  bound  by  such  contract ;  unless  the 
partners  have  given  their  express  sanction,  or  they  have 
subsequently  ratified  the  unauthorized  contract  of  the  part- 
ner, either  expressly  or  by  implication  from  the  receipt  of 
the  consideration  of  the  contract,  with  knowledge  of  all  the 
material  facts  of  the  case.  This  may  be  accepted  as  a 
safe  terse  statement  of  the  law  of  agency  as  it  is  applied 
to  the  acts  of  one  i)artner  in  the  name  of  the  partnership.^ 

1  French  v.  Price,  24  Pick.  13;  Silver  v.  Jordan,  136  Mass.  319;  Briggs 
V.  Partridge,  64  N.  Y.  357  (21  Am.  Rep.  617);  Jessup  v.  Steurer,  75  N.  Y. 
613. 

'  Nave  V.  Iladley,  74  lad.  155;  Downer  v.  Read,  17  Minn.  493. 

3  For  a  fuller  discussion  of  the  subject  see  Tiedeman  Com.  Paper, 
Chapter  VI.,  and  treatises  on  Partnerships. 

89 


§  41  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

When  we  apply  these  general  rules  to  the  consideration 
of  the  power  of  one  partner  to  bind  the  firm  by  the  itssue 
and  negotiation  of  negotiable  instruments,  by  signing  the 
firm's  name  to  such  paper,  either  as  maker  of  a  note,  or 
drawer  or  acceptor  of  a  bill  or  check,  as  an  indorser  of 
either  of  these  instruments  ;  the  first  query  to  arise  in  the 
determination  of  the  liability  of  the  firm  on  such  bill,  note 
or  check,  is  whether  the  act  of  the  partner,  in  signing  the 
firm's  name,  was  expressly  authorized  or  subsequently  rati- 
fied by  the  other  partners.  If  there  is  an  express  authori- 
zation or  a  subsequent  ratification,  there  can  be  no  question 
as  to  the  liability  of  the  partnership  on  the  paper.  But 
where  there  is  no  such  express  or  implied  ratification,  in 
order  that  the  partnership  may  be  held  bound  on  the  paper, 
it  must  be  shown  that  the  execution  of  the  bill,  note  or 
check,  by  the  partner  in  the  firm's  name,  came  within  the 
implied  authority  of  the  partner  to  bind  the  firm,  because 
the  negotiation  of  the  bill,  note  or  check  was  reasonably 
necessary  in  the  ordinary  prosecution  of  the  business  of  the 
firm.  If  the  nature  of  the  business  was  such  that  the 
employment  of  negotiable  paper  was  necessary,  or  uni- 
versally or  generally  customary  in  the  ordinary  prosecution 
of  such  business,  the  partner  will  have  the  implied  authority 
to  bind  the  partnership  by  his  use  of  such  paper  in  the 
interest  of  the  firm.  The  nature  of  the  partnership  busi- 
ness must  determine  the  existence  or  non-existence  of  this 
implied  authority  of  the  partners.  And  it  may  be  stated 
as  a  general  proposition,  with  probably  no  exception,  that 
where  the  business  of  the  co-partnership  generally  requires 
the  use  of  capital,  and  procurement  of  loans,  and  it  is 
customary  for  those  engaged  in  that  business  to  borrow 
money  and  to  receive  and  issue  bills,  notes  and  checks  in 
the  ordinary  prosecution  of  the  business,  the  active  partner 
will  be  held  to  have  the  implied  power  to  bind  the  firm  by 
signing  the  firm's  name  to  such  paper.  Thus  the  members 
of    all    trading    partnerships  have    this    implied    power,^ 

1  Kimbrow.  Bullitt,  22  How.  256;  Hayward  v.  French,  12  Gray,  453; 

90 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  §   41 

and  all  manufacturing  partnerships,  where  credit  is  neces- 
sary.^ But  where  the  ordinary  prosecution  of  the  business 
of  the  partnership  does  not  require  the  use  of  commercial 
paper,  the  partner  has  no  implied  power  to  bind  the  firm 
by  his  execution  of  a  bill  or  note.  For  credit  is  not 
essential  in  such  cases  to  the  prosecution  of  the  busi- 
ness.2  This  has  been  the  invariable  rule  in  respect  to 
a  firm  of  practicing  lawyers,^  and  of  a  firm  of  prac- 
ticing physicians,*  This  implied  power  has  been  denied, 
altljough  not  with  such  strong  reason  therefor,  to  a 
firm  of  tavern  keepers,'^  brokers,^  and  farmers.^  But 
even  where  the  partner  has  the  implied  power  to  bind  the 
partnership  by  signing  the  firm's  name  to  a  bill,  note  or 
check,  the  power  is  limited  to  its  exercise  in  the  prosecu- 
tion of  the  business  of  the  firm.  The  partner  has  not  the 
implied  power  to  bind  the  other  partners,  where  he  signs 
the  firm's  name  to  a  negotiable  instrument  for  the  accom- 
modation of  a  third  party,  unless  that  is  a  part  of  the  busi- 
ness of  the  partnership,  which  is  not  usual  or  common. 
And  so,  likewise,  is  the  partner  not  impliedly  authorized  to 
sign  the  firm's  name  to  notes  and  bills  issued  for  his  own 
private  accommodation  or  in  payment  of  his  own  debts. 
Where  the  payee  or  holder  of  such  a  paper  takes  it  with 

Sedgwick  v.  Lewis,  70  Pa.  St.  217;  Sherwood  v.  Snow,  46  Iowa,  481  (26 
Am.  Rep.  155J  ;  Atlantic  St.  Bit.  v.  Savery,  82  N.  Y.  291. 

1  Kimbro  v.  Bullitt,  22  How.  256. 

2  See  generally  Hunt  v.  Chapin,  6  Lans.  139;  Ricketts  v.  Bennetts,  4 
C.  B.  699;  Zuel  v.  Bowen,  78  111.  234;  McCrary  v.  Slaughter,  58  Ala.  230; 
Huguley  v.  Morris,  65  Ga.  666. 

3  Hedley  v.  Bainbridge,  3  Q.  B.  316;  Marsh  v.  Gold,  2  Pick.  285; 
Friend  v.  Duryee,  17  Fla.  Ill  (35  Am.  Rep.  89);  Breckenridge  v.  Shrieve, 
4  Dana,  375;  Smith  v.  Sloan,  37  Wis.  285  (19  Am,  Rep,  757), 

*  Except  that  to  the  members  of  such  a  firm  may  be  conceded  the 
implied  power  to  bind  the  firm  by  contract  for  the  purchase  of  medical 
supplies,  particularly  in  the  case  of  country  doctors,  who  maintain  a 
stock  of  drugs  and  fill  all  their  own  prescriptions.  Crosthwaite  v.  Rose, 
1  Humph.  23  (34  Am.  Dec.  613). 

5  Cocke  V.  Branch  Bank,  3  Ala.  175. 

6  Yates  V.  Dalton,  28  L.  J.  Exch.  69;  Third  Nat.  Bank  v.  Snyder,  10 
Mo.  App.  211. 

'  Prince  v.  Crawford,  50  Miss,  344;  Hunt  v.  Chapin,  6  Lans.  139. 

91 


§   42  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

knowledore  of  the  unauthorized  use  of  the  firm's  name,  in 
execution  of  the  paper,  he  cannot  hold  the  firm  liable  on  it. 
But,  in  consequence  of  the  negotiable  character  of  the 
paper,  if  he  does  not  know  that  the  implied  power  has  been 
exercised  in  the  issue  of  the  paper  for  an  unauthorized  pur- 
pose, outside  of  the  business,  he  has  a  right  to  presume 
that  it  was  issued  by  the  partner  in  the  due  course  of  the 
partnership  business,  and  the  firm  will  be  bound  on  it  to 
the  bona  fide  holder.^ 

Where  the  note  or  bill  is  issued  for  the  accommodation 
of  another  party,  it  may  be  so  executed  as  that  a  subsequent 
holder  may  take  it  without  learning  from  the  face  of  it, 
that  the  firm's  name  has  been  signed,  in  order  to  lend  the 
firm's  credit  to  the  paper,  and  to  enable  the  principal  debtor 
to  discount  the  paper  on  more  favorable  terms.  And  where 
that  is  the  case,  the  holder  may  claim  to  be  a  bona  fide 
holder  and  as  such  to  hold  the  firm  liable.  That  would 
be  true,  where  the  signature  of  the  firm  is  so  used  on  the 
paper  as  to  make  the  partnership  appear  as  a  regular  party 
to  the  bill  or  note,  as  maker,  drawer  or  acceptor  or  as  payee 
or  indorsee.  But  where  the  signature  of  the  firm  is  so  used 
so  as  to  make  it  an  irregular  indorsement,^  it  is  manifest 
that  the  paper  has  not  been  indorsed  by  tlic  firm  in  the  due 
course  of  its  business,  and  hence  the  holder  cannot  claim 
to  be  a  bona  fide  holder.^ 

§  42.  Form  of  the  firm's  signature. —  The  proper  form 
of  signature  for  a  firm  in  any  contract  is  the  writing  of  the 

J  First  Nat.  Bank  v.  Morgan,  6  Hun,  340;  73  N.  Y.  593;  Atlantic  State 
Bank  v.  Savery,  82  N.  Y.  296;  Michigan  Bank  v.  Eldred,  9  Wall.  544; 
Hayward  v.  French,  12  Gray,  453;  Graves  «.  Kellenbergen,  51  lud.  66; 
Mooreheadu.  Gilraore,  77  Pa.  St.  118  (18  Am.  Rep.  435);  Falerv.  Jordan, 
44  Miss.  283;  Sherwood  v.  Snow,  46  Iowa,  481  (26  Am.  Rep.  155);  Car- 
rier V.  Cameron,  31  Mich.  373. 

2  See  post,  §         ,  for  a  full  discussion  of  irregular  indorsements. 

3  National  Bank  of  Comnerce  v.  Law,  127  Mass.  72;  Stimson  v. 
"Whitney,  130  Ma-s.  591-;  Roth  v.  Colvin,32  Vt.  125;  Marsh  v.  Thompsoa 
Nat.  Bank,  2  Bradw.  217;  Chemung  Canal  Bank  v.  Bradner,  44  N.  Y. 
680;  Stockdale  v.  Keyes,  79  Pa.  St.  251;  Carrier  v.  Cameron,  31  Mich. 
373;  Atlantic  State  Bank  v.  Savery,  82  N.  Y.  294. 

92 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  §   42 

firm's  name,  whatever  it  is.  There  is  no  legal  limitation  of 
the  partnership's  power  to  adopt  any  signature  which  the 
partners  may  see  fit.  It  is  not  an  uncommon  practice  for 
a  firm  to  do  business  and  to  make  contracts  in  the  name  of 
one  of  the  partners.  And  where  that  fact  is  established, 
a  note  or  bill  containing  the  name  of  that  partner  may  be 
treated  as  a  partnership  obligation.  But  inasmuch  as  that 
partner  uses  his  name  in  his  private  transactions,  where  a 
note  or  bill  contains  the  name  of  the  partner,  it  is  pre- 
sumed to  be  his  private  obligation,  until  it  is  shown  to  be  a 
partnership  contract;  and  this  must  be  proven  affirmatively, 
in  order  to  hold  the  partnership  liable.^ 

The  firm  would  also  be  bound  on  a  note  or  bill,  where  a 
partner,  instead  of  signing  the  firm's  name,  writes  the 
individual  names  of  all  the  partners.^  Where  the  firm  is 
the  drawee  of  a  bill  of  exchange,  inasmuch  as  no  one  but 
the  firm  can  make  a  good  acceptance,  any  signature  affixed 
to  the  acceptance  by  a  partner,  where  the  authority  to 
bind  the  firm  as  an  acceptance  is  undoubted,  will  be  suffi- 
cient; the  writing  of  the  partner's  own  name  would  be  a 
good  acceptance  in  the  absence  of  any  local  statute,  requir- 
ing the  firm's  name  to  be  signed  to  the  acceptance.^ 
Where  a  note  is  made  payable  to  a  firm  when  it  was  in- 
tended  for  an  individual  partner,  the  maker  cannot  resist 

1  Manufacturer's  &c.  Bank  v.  Winship,  5  Pick.  II  (16  Am.  Dec.  369); 
Crocker  v.  Colwell,  4G  N.  Y.  212;  Boyle  v.  Skinner,  19  Mo.  82;  Buckner 
V.  Lee,  8  Ga.  285;  Scott  &Thacher  v.  Colmesnil,  7  J.  J.  Marsh.  416;  Bank 
of  Rochester  v.  Monteath,  1  Denio,  402  (43  Am.  Dec.  681);  Nifflin  v. 
Smith,  17  Serg.  &R.  165.  But  if  the  partner,  in  whose  name  the  firm's 
business  is  being  transacted,  is  not  engaged  in  any  private  business,  the 
note  or  bill  is  presumed  to  be  the  obligation  of  the  firm.  Yorkshire 
Banking  Co.  v.  Beason,  L.  R.  5  C.  P.  D.  109. 

2  Patch  V.  Wheatland,  8  Allen,  102;  Thayer  v.  Smith,  116  Mass.  363; 
McGregor  v.  Cleveland,  5  Wend.  475;  Filley  v.  Phelps,  18  Conn.  301; 
McKee  v.  Hamilton,  33  Ohio  St.  7;  Holden  v.  Bloxum,  35  Miss.  (6  Geo.) 
381.  But  if  it  is  not  issued  in  the  course  of  business  of  the  firm,  but  in 
prosecution  of  an  outside  transaction,  this  fact  may  be  shown.  Ridge- 
way  V.  Raymond,  82  Iowa,  582  (48  N.  W.  944). 

'  Mason  v.  Rumsey,  1  Campb.  384;  Ala.  Coal  M.  Co.  v.  Brainerd,  35 
Ala.  476;  Tolman  v.  Hanrahan,  44  Wis.  133;  Parnell  v.  Phillips,  55  Ga. 
618.     But  see  contra,  Ileeuan  v.  Nash,  8  Minn.  407  (83  Am.  Dec.  790). 

93 


§  43  PARTIES    TO    BILLS    AND    NOTES.  [CII.   IV. 

payment  to  the  firm  or  its  indorsee,  where  either  of  them 
can  prove  bona  Jide  ownership.^ 

§  43.  Private  corporations  as  parties. —  It  is  needless 
to  state  formally  that  private  corporations  have  the  power 
to  execute  bills,  notes  and  other  commercial  paper,  when 
that  power  is  expressly  given  to  them  in  their  charters,  or 
by  the  general  laws  of  the  State,  under  which  they  were 
incorporated.  Nor  is  it  necessary  to  explain  why  they 
have  not  the  power,  when  they  are  expressly  forbidden  to 
exercise  the  power. ^  There  is  room  for  doubt  and  uncer- 
tainty, only  in  respect  to  the  extent  to  which  the  power  to 
issue  bills  and  notes  and  other  negotiable  instruments  can  be 
inferred  or  implied  from  the  character  and  express  powers 
of  the  corporation.  According  to  the  P^nglish  authorities, 
the  power  will  only^be  implied  when  the  corporation  cannot 
without  it  carry  on  its  business,  or  attain  the  end  for 
which  it  was  created,  and  it  is  not  necessarily  implied 
from  the  power  to  contract  debts;  since  the  power  to 
issue  negotiable  instruments  involves  a  power  additional  to 
the  contraction  of  a  debt,  viz.,  the  imposition  upon  the 
corporation  of  a  liability  to  innocent  indorsees  for  debts, 
which  the  corporation  is  not  authorized  to  contract.  The 
two  powers  are  held  to  be  entirely  distinct  and  separate.^ 
But  while  the  distinction  thus  made  by  the  English  courts 
may  be  technically  sound;  in  this  country  the  reason  for  it 
is  outweighed  by  the  -consideration,  that  a  large  part  of  the 
trade,  manufacturing  and  mining  of  the  country  is  con- 
ducted by  corporations  and  the  recognition  of  the  distinc- 
tion between  the  two  powers  would  prove  embarrassing  to 
the  commercial  interests  of  the  country.     For  that  reason, 

1  Cannon  v.  Lindsey,  85  Ala.  198  (3  So.  676). 

2  But  a  mere  prohibition  of  private  corporations  io  issue  negotiable 
paper  as  currency  or  circulating  medium  will  not  prevent  them  from 
becoming  parties  to  bills  and  notes  in  the  prosecution  of  their  legitimate 
business.  Atty.-Gen.  v.  Life  &  Fire  Ins.  Co.,  9  Paige,  470;  Mumford  v. 
Am.  L.  Ins.  Co.,  4  N.  Y.  4G3;  Buckley  v.  Briggs,  30  Mo.  452;  Western 
Cottage  Organ  Co.  v.  Reddish,  51  Iowa,  55  (49  N.  W.  1048). 

3  Bateman  v.  Mid.  Wales  Ry.  Co.,  L.  R.  1  C.  P.  499. 

94 


CH.  IV.]  PARTIES    TO    BILLS    AND    NOTES.  §  43 

the  distinction  is  generally  ignored  by  the  courts  in  the 
United  States,  and  the  broad  proposition  is  laid  down  that, 
whenever  a  corporation  can  contract  a  debt  for  a  certain 
object,  it  can  put  its  obligation  into  the  form  of  a  nego- 
tiable note  or  bill,  and  assume  the  general  liability  of  par- 
ties to  negotiable  paper. ^ 

Unless  the  corporation  is  expressly  authorized  by  its  char- 
ter to  become  a  partj  to  accommodation  paper,  it  cannot  be 
bound  by  its  signature  to  such  paper,  at  least  to  the  imme- 
diate payee  ;  for  accommodation  paper  cannot  be  considered 
to  have  been  issued  in  the  due  course  of  business  of  an 
ordinary  business  corporation.^  But  if  the  accommodation 
paper  has  been  signed  by  the  officers  of  the  corporation  in 
the  name  of  the  corporation,  so  that  the  corporation  is 
made  to  appear  as  a  regular  party  to  the  bill,  note  or  check, 
a  bona  fide  indorsee  or  holder  may  enforce  the  obligation 
against  the  corporation.^ 

Indeed,  it  is  the  general  rule,  that,  while  between  the 
original  parties  to  the  paper,  a  corporation  can  defend  in  a 
suit  on  its  bills,  notes  and  checks,  by  pleading  that  its  issue 
was  ultra  vires,*  this   defense   will   not  prevail   against  a 

1  Mahoney  Mining  Co.  v.  Anslo-Cal.  Bk.,  104  U.  S,  192;  Moss  v. 
Averill,  10  N.  Y.  449;  Mechanics'  Banking  Ass'n  &c.  v.  White  Lead 
Co.,  35  N.  Y.  505;  Hay  ward  v.  Pilgrim  Society,  21  Pick.  270;  Fay  v. 
Noble,  12  Cush.  1;  Monument  Nat.  Bank  v.  Globe  Works,  101  Mass.  57 
(3  Am.  Rep.  322);  Oxford  Iron  Co.  v.  Spradley,  46  Ala.  98;  Ward  u. 
Johnson,  95  111.  215;  Lucas  v.  Pitney,  27  N.  J.  L.  (3  Dutch.)  221; 
Davis  V.  W.  Saratoga  Bldg.  Union,  32  Md.  285;»Lebanon  &c.  Road  Co. 
V.  Adair,  85  Ind.  244;  Auerbach  v.  LeSueur  Mill  Co.,  28  Minn.  291 
(9  N.  W.  799);  Am.  Exch.  Nat.  Bank  v.  OregonPottery  Co.,  55 Fed.  2G5. 

2  West  St.  Louis  Sav.  Bank  v.  Shawnee  Co.  Bk.,  95  U.  S.  557;  Bank 
of  Genesee  v.  Patchin  Bank,  13  N.  Y.  309;  s.  c.  19  N.  Y.  312;  Erie  Boot 
&  Shoe  Co.  V.  Eichenland,  127  Pa.  St.  1G4  (17  A.  889);  Monument  Nat. 
Bank  u.  Globe  Works,  101  Mass.  57  (3  Am,  Rep.  322);  Farmers'  N.  B. 
V.  Sutton  Mfg.  Co.,  52  F.  191;  6  U.  S.  App.  312;  Beecher  v.  Dacy,  45 
Mich.  92;  Aetna  Nut.  Bank  v.  Charter  Oak  Ins.  Co.,  50  Conn.  1G7. 

3  Bird  V.  Daggett,  97  Mass.  494;  National  Banks  v.  Wells,  79  N.  Y. 
498;  Hall  v.  Auburn  Turnpike  Co.,  27  Cal.  255  (87  Am.  Dec.  75);  In  re 
Jacoby-Micholas  Co.  (Minn.  '97),  70  N.  W.  1085;  Am.  Trust  &  Sav.  Bank 
V.  Gluck,  Id.f  and  other  cases  cited  in  the  preceding  note. 

*  Credit  Co.  v.  Howe  Machine  Co.,  54  Conn.  357  (8  A.  472). 

95 


§  43  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV, 

bona  fide  holder ;  the  common  rule  of  negotiable  paper 
applying,  that  the  indorsee  takes  the  paper  free  from  the 
equitable  defenses  that  taint  the  character  of  the  paper, 
while  it  is  still  in  the  hands  of  the  original  payee. ^  The 
power  of  a  corporation,  to  become  a  payee  or  indorsee  of  a 
bill,  notq,  or  check,  and  to  bind  itself  by  an  indorsement 
of  the  paper,  is  undoubtedly  free  from  all  doubt,  where 
such  note,  bill  or  check  is  received  by  it  in  payment  of  some 
debt  due  to  it.'^  And  even  where  a  corporation  has  exceeded 
its  powers  in  taking  commercial  paper  as  payee  or  indorsee, 
because  the  transaction,  which  is  settled  by  the  delivery  or 
transfer  of  the  paper,  is  ultra  vires;  the  primary  and  prior 
obligors,  the  maker,  drawee,  acceptor  and  prior  indorser, 
cannot  plead  the  ultra  vires  as  a  defense  in  the  action 
brought  against  them  by  such  corporation.^ 

Of  course,  in  conformity  with  the  general  law  of  agency, 
in  order  that  a  corporation  may  be  liable  as  a  party  to  a 
bill  or  note,  its  name  must  have  been  affixed  to  the  paper  by 
a  duly  authorized  agent.  Any  agent,  expressly  authorized 
by  the  board  of  directors,  or  other  governing  body,  may 
bind  the  corporation  by  making  it  a  party  to  a  note  or 
bill;*  and  so,  also,  where,  by  the  custom  of  business,  an 

1  Stoney  v.  Am.  L.  Ins.  Co.,  11  Paige,  635;  Brown  v.  Donnell,  49  Me. 
421  (77  Am.  Dec.  266);  Ellsworth  v.  St.  Louis  K.  R.  Co.,  98  N.  Y.  553; 
Hart  V.  Mo.  &c.  Ins.  Co.,  21  Mo.  91;  Clark  v.  Lake  Ave.  &c.  Sav.  &  L. 
Assn.,  65  Hun,  625;  Zabriskie  v.  Cleveland  &c.  R.  R.  Co.,  23  How.  381; 
Supervisors  u.  Schenck,  5  Wall.  784;  Grommes  v.  Sullivan,  81  Fed.  45; 
Pickaway  Co.  Bank  v.  Prather,  12  Ohio  St.  497;  Mclntire  v.  Preston,  10 
111.  48  (48  Am.  Dec.  321);  Merchants'  Nat.  Bank  v.  Lovitt,  114  Mo.  519 
(21  S.  W.  825). 

2  Planters'  Bank  v.  Sharp,  6  How.  301;  Lucas  v.  Pinney,  27  N.  J.  L. 
221;  Frye  v.  Lucker,  24  111.  180;  Buckley  v.  Briggs,  30  Mo.  452;  Savage 
V.  Walsh,  26  Ala.  631. 

3  Farmington  S.  Bank  v.  Fall,  71  Me.  49;  Farmers  &  M.  Ins.  Co.  v. 
Needles,  52  Mo.  17;  City  of  St.  Louis  v.  Shields,  62  Mo.  247;  Nat.  Pem- 
berton  Bk.  v.  Porter,  125  Mass.  333  (28  Am.  Rep.  235);  Massey  v.  Citi- 
zens Bldg.  Ass.,  22  Kan.  624;  Greener  v.  Ulerey,  20  Iowa,  266;  Poock 
V.  Lafayette  Bldg.  Assn.,  71  Ind.  357;  Nat.  Bank  v.  Matthews,  98  U.  S. 
621. 

*  National  Spraker   Bank  v.  Treadwell   Co.,  80  Hun,   362;    Grant  v. 
Treadwell  Co.,  82  Hun,  591,  holding  that  a  substantial  conformity  with 
96 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  §   44 

officer  has  the  implied  power  to  so  bind  his  corporation, 
no  express  power  is  required;  as,  for  example,  the  cashier 
of  a  bank.^ 

§  44.   Form  of  signature  by  agents  of  corporations. — 

In  the  proper  execution  of  a  note  or  bill,  in  the  name  of 
and  for  a  private  corporation,  the  cor[)oi"ate  name  should 
be  used  in  the  body  of  the  instrument,  whether  the  corpo- 
ration is  maker  of  a  note,  or  drawer,  or  drawee  of  a  bill, 
or  a  payee  or  indorsee  of  either.  And  where  this  precau- 
tion is  observed,  the  obligation  or  right  of  the  corporation 
as  a  party  to  such  paper  is  unquestionable,  it  matters  not 
how  informal  the  signature  by  the  agent  may  be.  In  such 
a  case,  merely  affixing  the  official  title  to  the  agent's  signa- 
ture will  be  sufficient  to  make  it  a  good  execution  of  a  corpo- 
rate note  or  bill  or  of  an  indorsement  i^  although  the  better 
and  proper  form  of  the  signature  would  be  the  corporate 
name^^'7*  the  officer,  as,  for  example,  "  The  A.  B.  Company 
perC.  D.,  Treasurer."  Where  the  name  of  the  corporation 
does  not  appear  in  the  body  of  the  instrument,  which  is 
not  an  unusual  occurrence,  clearer  evidence  is  jjenerallv  re- 
quired  in  the  signature  of  the  paper  of  its  being  a  corporate 
obligation,  so  as  to  bind  the  corporation.  In  this  case,  the 
signature  should  be  as  it  is  given  above.  But  the  authorities 
seem  generally  to  hold  that  when  a  note  reads  "  We  (or  I) 
promise  to  pay,"  and  signed  "  C.  D.  for  (in  behalf  of,  on 
account  of,  by  the  order  of,  for  the  use  of)  the  A.  B.  Com- 

the  requirement  of  the  by-laws  as  to  the  power  of  agents  will  be  suffi- 
cient to  bind  the  corporation. 

1  West  St.  Louis  &c.  Bk.  v.  Shawnee  Bank,  95  U.  S.  557;  Potter  v. 
Merchants'  Bank,  28  N.  Y.  641  (86  Am.  Dec.  273);  Mead  v.  Merchants' 
Bank,  25  N.  Y.  143;  Cook  v.  Stat.  Nat.  Bank,  52  N.  Y.  96  (11  Am.  Rep. 
667);  Cooper  v.  Curtis,  30  Me.  488;  State  Bank  v.  Kaine,  1  111.  45; 
Sturgis  V.  Bank  of  Circleville,  11  Ohio  St.  153  (78  Am.  Dec.  206) ; 
Ballston  Spa  Bank  v.  Marine  Bank,  16  Wis.  120.  But  he  has  no  implied 
authority  to  bind  bank  by  accommodation  indorsements.  Nat.  Bank  of 
Commerce  v.  Atkin.son,  55  Fed.  465. 

2  Ellis  V.  Pulsifer,  4  Allen,  165;  Jefts  v.  York,  4  Cash.  371  (50  Am. 
Dec.  791);  s.  c.  10  Cush.  392;  Hall  v.  Crandall,  29  Cal.  567  (89  Am. 
Dec.  64);  Liebscher  w.  Kraus,  74  Wis.  387  (43  N.  W.  166).  But  see 
Franklaud  v.  Johnson,  147  111.  520  (35  N.  E.  480). 

7  97 


/ 


§  44  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

pany,"  the  corporation  i^  bound  and  nc^t  the  agent  individ- 
ually.* But  where  no  such  prepositions  are  employed  in 
the  signature,  to  indicate  that  the  agent  or  official  is  acting 
in  behalf  of  and  as  agent  of  the  corporation,  a  note  or 
bill,  signed  "  C.  D.,  Treasurer  of  the  A.  B.  Company," 
would  be  held  by  the  weight  of  authority  in  this  country 
to  be  the  individual  obligation  of  C.  D.,  the  suffix  of  his 
signature,  *'  Treasurer  of  the  A,  B.  Company,"  being  held 
to  be  a  mere  descripiio  personaef  and  not  to  evince  the 
intention  to  make  the  corporation  a  party  to  the  note  or 
bill.2 

It  is  probable  that  all  the  courts  agree  in  holding  that, 
where  the  name  of  the  corporation  does  not  appear  either 
in  the  body  of  the  instrument  or  in  the  signature,  it  is  not 
a  corporate  obligation  but  the  individual  obligation  of  the 
agent  or  officer  of  the  corporation,  although  he  affixes  to 
his  signature  the  title  of  his  office.^ 

1  Jefts  V.  York,  4  Cush.  371  (50  Am.  Dec.  791) ;  10  Cush.  392;  Bradlee 
V.  Boston  Glass  Mfg.  Co.,  16  Pick.  347;  Walker  v.  Bank  of  State  of  N. 
y.,  9  N.  Y.  682;  Liudus  v.  Melrose,  3  H.  &  N.  177;  Harvey  v.  Irvine,  11 
Iowa,  82;  Gillette.  New  Market  Sav.  Bank,  7  Bradw.  499;  Neptune  v- 
Paxton,  15  Ind.  App.  284  (43  N.  E.  276)  ;  Cresswell  v.  Holden,  3  Mac- 
Arth.  579. 

2  Fiske  u.  Eldridge,  12  Gray,  474;  Tucker  Mfg.  Co,  v.  Fairbanks,  98 
Mass.  101;  Casco  Nat.  Bk.  v.  Clark,  189  N.  Y.  307  (34  N.  E.  908)  ;  Moss 
V.  Livingston,  4  N.  Y.  208;  First  Nat.  Bank  v.  Stuetzer,  80  Hun,  435; 
Williams  v.  Second  Nat.  Bank,  83  Ind.  237;  McNeil  v.  Stiober  &c.  Co., 
144  111.  238  (33  N.  E.  31) ;  Tilden  v.  Barnard,  43  Mich.  376  (38  Am,  Rep. 
197) ;  Day  v.  Ramsdell,  90  Iowa,  731  (57  N.  W.  630) ;  Hately  v.  Pike,  162 
111.  241  (44  N.  E.  441);  Smith  v.  Alexander,  31  Mo.  193;  Chamberlain 
V.  Pacific  Wool  &c.  Co.,  64  Cal.  103;  Mathews  v.  Dubuque  &c.  Co.,  87 
Iowa,  246  (54  N.  W.  225) ;  MofEett  v.  Hampton  (Ky.),  31  S.  W.  881. 
See  Harris  u.  Coleman  &  Ames  &c.  Co.,  58  Iil.  App.  366.  But  see  contra, 
Hovey  v.  Magill,  2  Conn.  680;  Johnson  v.  Smith,  21  Conn.  627;  Ken- 
nedy V.  Knight,  21  Wis.  340  (^94  Am.  Dec.  543);  Benham  u.  Smith,  53 
Kan.  495  (36  P.  997). 

3  Duvall  ■;;.  Craig,  2  Wheat.  56;  Pease  v.  Pea-e,  35  Conn.  131  (95  Am. 
Dec.  225);  Towne  v.  Rice,  122  Mass.  67;  Adams  v.  Kennedy,  175  Pa. 
St.  160  (34  A.  659);  Trustees  of  Cahokia  v.  Rautenberg,  88  IH.  219; 
Haines  w.  Nance,  52  111.  App.  406.  But  where  the  note  reads:  "  We  as 
trustees,  and  not  individually,  promise,"  etc.,  all  individual  liability  is 
necessarily  precluded,  whatever  may  be  the  form  of  signature.  Shoe 
Leather  Nat.  Bank  v.  Dix,  123  Mass.  148  (25  Am.  Rep.  49). 

98 


CH.  IV.]  PARTIES    TO    BILLS    AND    NOTES.  §   4G 

§  45.   Commercial  paper  of  corporations  under  seal. — 

As  has  elsewhere  ^  been  explaiued,  the  general  rule  of  the 
law  of  commercial  paper  is  that  it  must  not  be  sealed,  in 
order  to  be  negotiable.  But,  according  to  the  early  com- 
mon law,  a  corporation  could  not  make  a  lawful  binding  con- 
tract, except  under  its  corporate  seal ;  and  for  that  reason,  a 
promissory  note  or  bill  of  exchange  issued  by  a  corporation 
had  to  be  impressed  with  the  corporate  seal.  Following 
the  general  rule,  that  the  seal  destroyed  the  negotiability 
of  the  instrument,  a  valid  corporate  note  or  bill  was  treated 
as  having  in  every  respect  the  legal  effect  of  a  bond  or 
covenant.^  But  it  is  now  very  generally  held  :  first,  that  a 
corporation  may  make  any  contract  or  execute  any  legal 
instrument,  without  using  its  corporate  seal,  wherever 
this  may  be  done  by  natural  persons;^  and  secondly y 
that  if  the  seal  is  used  by  a  corporation  in  the  execution 
of  what  would  otherwise  be  a  negotiable  instrument,  the 
use  of  the  seal  will  not  destroy  the  negotiable  character  of 
the  paper,  unless  that  intention  is  shown.  This  is  true, 
not  only  when  the  paper  has  in  every  other  respect  the 
form  of  an  ordinary  promissory  note  or  bill  of  exchange, 
but  al.-o  when  it  is  a  coupon  bond.* 

§  40.  I>rafts  or  warrants, of  one  oflScer  of  tlie  corpora- 
tion on  another. —  It  is  a  comparatively  common  custom  in 

1  Ante,  §  5. 

2  See  Clark  v.  Farmers'  &c.  Mfg.  Co.,  15  Wend.  256;  Rawson  v.  David- 
son, 40  Mich.  607;  Osborn  v.  Kistler,  36  Ohio  St.  99;  Sidle  v.  Anderson, 
45  Pa.  St.  4G4. 

3  Bank  of  Columbia  v.  Patterson,  7  Cranch,  305;  Bank  of  U.  S.  v. 
Dandridge,  12  Wheat.  64;  Many  v.  Boekman  Iron  Co.,  9  Paige,  188; 
Colson  V.  Arnot,  57  N.  Y.  253;  Whitford  v.  Laidkr,  94  N.  Y.  145;  Town 
of  New  Athens  V.  Thomas,  82  111.  259;  Buckley  v.  Briggs,  30  Mo.  452. 

4  White  V.  Vermont  &c.  K.  R.  Co.,  21  How.  575;  Comrs.  Knox  Co.  v. 
Aspinwall,  21  Iluw.  639;  Clark  v.  Iowa  City,  20  Wall.  683;  Chapin  v. 
Vt.  &c.  R.  R.  Co.,  8  Gray,  675;  Iliiven  v.  Grand  Junction  R.  R.  Co.,  109 
Mass.  88;  Jackson  v.  Myers,  43  Md.  452;  Mason  v.  Frick,  105  Pa.  St.  162 
(51  Am.  Rep.  191);  Smith  v.  Clark  County,  54  Mo.  58;  Mackay  v.  St. 
Mary's  Church,  15  R.  I.  121  (23  A.  108)  ;  Colson  v.  Arnot,  57  N.  Y.  253 
(15  Am.  Rep.  490);  Evertsou  v.  Nat.  Bank,  (,(^  N.  Y.  14  (23  Am.  Rep.  9). 
See  Tiedeman  Com.  Paper,  Chap.  XXV,  for  a  discussion  of  the  charac- 
teristics of  coupon  bonds. 

99 


§   47  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

the  dealings  of  a  private  corporation  for  one  of  its  officers, — 
its  president  or  secretary,  for  example, —  to  draw  on  the 
treasurer  in  favor  of  some  person  to  whom  the  corporation 
has  become  indebted.  If  the  diaft  or  warrant  contains  all 
the  essentials  of  negotiable  paper,  there  can  be  very  little 
doubt  that  the  warrant  is  a  negotiable  bill  of  exchange,  in 
which  the  same  party  is  drawer  and  drawee ;  and  such  a 
warrant  may,  like  all  other  such  irregular  instruments,  ^  be 
treated  either  as  an  accepted  bill  of  exchange  or  as  a 
promissory  note.  Since  the  warrant  is  drawn  by  the  cor- 
poration on  itself,  the  drawer  and  drawee  being  practically 
the  same  person,  it  has  been  generally  held  that  it  is  not 
necessary  to  make  a  formal  presentment  for  acceptance  or 
payment,  in  order  to  hold  the  corporation  liable. ^ 

§47.  Governments  as  parties, —  The  power  of  the 
governments,  both  national  and  State,  to  become  parties  to 
negotiable  instruments,  as  drawer,  acceptor  and  maker,  is 
clearly  and  fully  recognized.^  It  is  a  common  thing  for 
these  governments  to  issue  coupon  bonds,  treasury  notes 
and  bills  of  credit,  which  are  essentially  nothing  more  than 
promissory  notes.*  And  the  courts  of  the  United  States 
have  recognized  the  power  of  a  foreign  government  to  be- 
come a  party  to  a  bill  of  exchange.^  But  since  governments 
do  not,  in  the  ordinary  administration  of  public  affairs, 
resort  to  the  issue  or  use  of  negotiable  paper;  in  order 
that  such  paper  may  be  lawfully  issued,  with  the  govern- 
ment as  a  party  to  the  same,  the  officer  of  the  government, 
who  issues  it,   must  have   an  express  authority  from  the 

»  Ante,  §  16. 

2  Fairchild  v.  Ogdensburg  &c.  R.  R.  Co.,  15  N.  Y.  337  (69  Am.  Dec. 
606);  Tripp  u.  Swanzey  Mfg.  Co.,  13  Pick.  291;  Shaw  v.  Stone,  1  Cush. 
228;  Indiana  &c.  R.  R.  Co.  v.  Davis,  20  lud.  6  (83  Am.  Dec.  303); 
"Wetumplia  &c.  R.  R.  Co.  v.  Bingham,  5  Ala.  657.  But  see  Sioux  Nat. 
Banli  V.  Cudahy  Packing  Co.,  63  Fed.  805, 

3  Poindexter  v.  Greenhow,  114  U.  S.  270;  U.  S.  v.  Bank  of  Metropolis, 
15  Pet.  377;  U.  S.  v.  Central  Nat.  Bank,  6  Fed.  Rep.  134;  State  ex  rel. 
Plock  V.  Cobb,  64  Ala.  127. 

4  See  Tiedeman  Com.  Paper,  Chapters  XXIV  and  XXV. 
s  Jones  V.  LeTombe,  3  Ball.  384. 

100 


Ctl.   IV.]  PARTIES    TO    BILLS    AND    NOTKS.  §   48 

legislative  department  of  the  government  to  negotiate  the 
bond  or  other  negotiable  instrument ;  except  so  far  as  the 
power  to  issue  negotiable  paper,  or  to  make  the  govern- 
ment a  party  to  it,  may  be  implied  as  being  necessary  to 
carry  out  some  express  power.  But  such  an  implication 
will  rarely  be  considered  as  necessary.  It  has  thus  been 
held  that  no  oflScer  of  the  United  States  government  has 
the  implied  authority  to  bind  the  government  by  his  ac- 
ceptance of  a  bill,  although  the  bill  is  drawn  against  an 
acknowledged  indebtedness  of  the  government  to  the 
drawer.* 

§  48.   Municipal  or  public  corporations   as  parties. — 

Under  the  terms,  municipal  or  public  corporations,  are 
included,  not  only  cities,  but  every  other  local  government 
which  are  instituted  under  the  laws  of  the  States,  viz.  : 
towns,  counties,  school  districts  and  townships.  In  every 
case,  the  powers  of  these  public  corporations  are  limited  by 
the  provisions  of  the  charters  under  which  they  have  been 
organized.  The  general  rule  of  interpretation  is,  that  the 
municipal  or  public  corporation  can  exercise  only  those  )iow- 
ers,  which  are  expressly  granted  by  the  charter,  or  which  are 
implied,  because  they  are  plainly  neccssiry  in  carrying  out 
the  powers  which  are  expressly  granted/^  In  answering  the 
question,  how  far  and  when  can  a  municipal  corporation  be 
bound  as  a  party  to  a  negotiable  instrument,  wo  find  no 
difficulty  where  the  power  is  expressly  granted.  There  can 
be  no  question  of  the  power  of  the  legislature  to  authorize  a 
municipal  corporation  to  become  a  party  to  a  bill,  note  or 
other  commercial  paper.  The  difficulty  arises  only  when 
the  power  is  claimed  to  be  iniplied.  Two  questions  are  here 
involved:  i'^?'?*s^,  whether  a  municipal  coiporatiou  has  the 
implied  power  to  borrow  money  and  bind  the  corporation 
by  the  obligation  thus  assumed  ;  or  whether  such  corpora- 
iiion  can  only  obtain  funds  by  means  of  taxation  :  secondly/, 
whether,  it'  the  implied  power  to  borrow  money  be    con- 

'  The  Floyrl  Acceptance.*,  7  Wall.  6GG. 

2  See  Tiederaau's  Municipal  Corp.,  Chap.  VIII,  IX. 

101 


§  48  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

ceded,  it  includes  the  power  to  give  in  evidence  of  the 
money  borrowed  a  negotiable  instrument,  a  note,  bill  or 
bond. 

On  the  first  question,  the  authorities  are  divided.  Some 
of  the  cases  maintain  that  the  ordinary  measure  for  pro- 
viding a  city  or  county  with  the  means  of  carrying  on  its 
work  is  taxation;  and  if  the  borrowing  of  money  becomes 
necessary,  a  special  grant  of  authority  should  Ke  required.^ 
But  the  current  of  judicial  opinion  is  decidedly  in  favor  of 
the  implied  power  of  municipal  and  public  corporations  of 
all  kinds  to  borrow  money,  within  the  express  limitations 
of  the  charter,  general  laws  and  constitution  of  the  State.^ 
But  it  must  be  for  a  public  purpose  that  the  money  is  bor- 
rowed.^ And  as  a  consequence  of  the  general  prevalence 
of  municipal  extravagance,  the  power  to  borrow  money  is 
now  very  generally  expressly  granted,  and  subjected  to 
express  limitations  as  to  the  amount  of  indebtedness  which 
might  be  incurred  by  borrowing  money.  The  ordinary 
limitation  is  a  specified  percentage  of  the  assessed  value  of 
private  property  subject  to  taxes.* 

Conceding  the  power  of  a  municipal  corporation  to  borrow 
money,  the  question  still  remains,  whether  it  can,  in  bor- 
rowing mone}^  bind  itself  by  becoming  a  party  to  nego- 
tiable paper,  so  that  a  bona  fide  holder  can  recover  on  it, 
although  there  are  defenses  which  may  be  set  up  against 
the  immediate  parties.  Some  of  the  authorities  hold  that 
this  power  can  be  exercised  only  when  the   power  to  bor- 

1  Mayor  of  Nashville  v.  Ray,  19  Wall.  4G8;  Hackettstown  u.  Swack- 
hamer,  37  N.  J.  L.  (8  Vroom)  191;  Knapp  w.  lioboken,  38  N.  J.  L.  (9 
Vroom)  371;  Gause  v.  City  of  Clarksville,  5  Dill.  C.  C.  165;  Mayor  of 
Wetumpka  v.  Wetumpka  Wharf  Co.,  63  Ala.  611;  Dively  v.  Cedar 
Falls,  21  Iowa,  365. 

2  Williamsport  v.  Com.,  84  Pa.  St.  487  (24  Am.  Rep.  708);  Ketchum 
V.  Buffalo,  14  N.  Y.  356;  Clarke  v.  School  District,  3  R.  I.  199;  Galeua 
V.  Corwith,  48  111.  423  (95  Am.  Dec.  557)  ;  Clarke  v.  Cily  of  Dcs  Moiues, 
19  Iowa,  199  (87  Am.  Dec.  423) ;  Bank  of  Chillicotlae  v.  Mayor  of  Chilli- 
cothe,  7  Ohio,  Ft.  II,  p.  31  (30  Am.  Dec.  185);  Mills  v.  Gleason,  11  Wis. 
470  (78  Am.  Dec.  721). 

3  SeeTiedeman's  Mun.  Corp.,  §§  137,  141,  175,  176,  184,  188. 

4  See  Tiederaan's  Mun.  Corp.,  §  189a. 

102 


CH.  IV.]  PAKTIES    TO    BILLS    AND    NOTES.  §   48 

row  money  is  expressely  granted.^  The  general  trend  of 
judicial  opinion  has,  until  lately,  been  allogetiier  in  favor 
of  the  implied  power  of  the  municipal  coi-poration,  to 
become  parties  to  a  strictly  negotiable  instrument. ^  But 
recently,  the  United  States  Supreme  Court  has  held  that 
the  power  of  a  municipal  corporation,  to  bind  itself  as  a 
party  to  negotiable  paper,  is  not  to  be  implied  from  the 
power  to  borrow  money,  whether  the  latter  power  be 
express  or  implied. "^  This  must,  however,  be  taken  as 
meaning  only  that  the  doctrine  of  ultra  vires  will  be  a  good 
defense,  even  as  against  bona  fide  holders.  And  where  the 
proceeds  of  the  negotiation  of  the  unauthorized  issue  of 
negotiable  paper  are  received  by  the  municipal  corporation, 
it  is  liable  to  the  holder  of  the  paper  for  the  amount 
so   received.* 

The  customary  form  of  negotiable  paper,  when  issued 
by  municipal  corporations,  is  that  of  a  coupon  bond,  or 
scrii)  ;^  and  it  is  rarely  the  case  that  a  municipal  or  public 
corporation  becomes  a  party  to  an  ordinary  bill  or  note. 
The  only  municipal  instrument  which  approximates  in 
character  these  common  kinds  of  negotiable  paper,  is  the 
warrant,  given  by  one  officer  of  a  municipal  corporation  on 

1  Mayor  of  Nashville  v.  Kay,  19  Wall.  476;  Ilackettstown  v.  Swach- 
hamer,  37  N.  J.  L.  (8  Vroom)  191. 

2  United  States  v.  U.  P.  R.  R.  Co.,  91  U.  S.  72;  Cromwell  v.  Lac.  Co., 
96  U.  S.  51 ;  Commissioners  v.  Block,  99  U.  S.  G8G;  Ottawa  v.  First  Nat. 
Bank,  105  U.  S.  342;  Ackley  School  Dist.  v.  Hall,  113  U.  S.  135;  New 
Providence  v.  Halsey,  117  U.  S.  33G;  Williamsport  v.  Com.,  84  Pa.  St.  487 
(24  Am.  Rep.  208);  Starin  v.  Genoa,  23  N.  Y.  454;  Curtiss  r.  Leavitt,  15 
N.  Y.  35G;  Goodman  t?.  Rara«ey  Co.,  11  Minn.  31;  Galena  v.  Corwith,  48 
111.  423  (95  Am.  Dec.  657)  ;  Boss  v.  Ilewett,  20  Wis.  4G0;  Crittenden  Co. 
V.  Shanks,  88  Ky.  475  (11  S.  W.  408);  Mayor  u.  Inman,  57  Ga.  370; 
Tucker  v.  Raleigh,  75  N.  C.  267;  Newgass  v.  New  Orleans,  42  La.  Ann. 
163  (7  So.  5G.i). 

3  Merrill  v.  Monticello,  138  U.  S.  673;  Brenham  v.  Germ. -Am.  Bank, 
144  U.  S.  173;  s.  c.  549,  reversing  35  Fed.  Rep.  185,  and  overruling 
Rogers  v.  Burlington,  3  Wall.  654;  MitchuU  v.  Burlington,  4  Wall.  270, 
and  distinguishing  Dwyer  v.  Mackworth,  57  Tex.  245. 

4  Iloag  V.  Greenwich,  133  N.  Y.  152  (30  N.  E.  842). 

*  For  discussion  of  coupon  bonds  in  general,  see  Ticdcman's  Com. 
Paper,  Chap.  XXV,  and  municipal  securities,  Tiedeman's  Muu.  Corp., 
Chap.  XL 

103 


§  49  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

the  treasurer  or  other  oflScer  of  such  corporation,  directing 
him  to  pay  a  sum  of  money  due.  The  general  trend  of 
authority  in  this  country  is  to  treat  these  warrants  as  of  the 
character  of  vouchers ;  and,  since  their  value  is  not  mate- 
rially enhanced  by  treating  them  as  negotiable  paper,  to 
deny  to  them  the  characteristics  of  negotiability,  at  least 
so  far  as  to  enable  a  boria  fide  holder  to  recover  on  the 
warrant,  where  the  officer  has  exceeded  his  authority  in 
issuing  the  warrant. ^ 

§  49.  Fiduciary  parties  and  personal  representatives 
as  parties. — Trustees  and  guardians  have  not  the  power  to 
bind  the  estates,  which  they  have  in  charge,  by  any  note  or 
bill  which  they  may  attempt  to  issue  in  their  representative 
capacity;  and  they  will  be  personally  liable  on  any  such 
bill  or  note,  even  though  they  stipulate  in  the  instrument 
that  they  are  acting  as  trustee  or  guardian. ^  But,  as 
between  the  guardian,  a  trustee  and  the  ward  or  cestui  que 
trust,  it  may  be  shown  that  the  consideration  for  such  bill 
or  note  redounded  to  the  benefit  of  the  estate.^  This  is 
particularly  true  in  cases,  in  which  the  trustee  has  the  power 
to  borrow  money  for  the  benefit  of  the  estate.  In  such 
cases,  the  doctrine  of  the  text  may  be  taken  as  meaning, 
that  the  personal  liability  of  the  trustee  stands  between  the 
bona  fide  holder  and  the  trust  estate,  to  protect  both 
against  his  unauthorized  exercise  of  the  power  to  borrow 
money.*     But  where  a  note  or  bill  is  made  payable  to  a 

1  District  of  Columbia  v.  Cornell,  130  U.  S.  655;  Wall  v.  Monroe,  103 
U.  S.  559;  Claiborne  Co.  ■;;.  Brooks,  111  U.  S.  400;  Emery  v.  Mariaville, 
56  Me.  315;  East  Union  v.  Eyan,  86  Pa.  St.  459;  People  v.  Johnson, 
100  111.  537  (39  Am.  Rep.  63);  State  v.  Huff,  63  Mo.  288;  State  v.  Lib- 
erty, 22  Ohio  St.  44;  Burlington  &c.  R.  R.  Co.  v.  Clay  Co.,  13  Neb.  367 
(13  N.  W.  628);  Oatman  v.  Taylor,  29  N.  Y.  657;  Knapp  v.  Hoboken,  38 
N.  J.L.  (9  Vroom)  371;  Harris  v.  United  States,  27  Ct.  of  CI.  177  (U.  S. 
Treasury  warrants). 

2  Towne  v.  Rice,  122  Mass.  67;  Hill  v.  Banister,  8  Cow.  31;  Taylor  v. 
Shelton,  30  Conn.  122;  Storrs  v.  Flint,  46  N.  Y.  Super.  Ct.  498;  Robert- 
son  V.  Banks,  1  Smedes  &  M.  666;  McGavoch  v.  Whitfield,  45  Miss.  452; 
Shiff  V.  Shiff,  20  La.  Ann.  269.     But  see  Gandy  v.  Babbitt,  56  Ga.  640. 

3  Poole  V.  Wjlliams,  42  Ga.  539;  Lapeyre  v.  Weeks,  28  La.  Ann.  665. 

4  See  U.  S.  Trust  Co.  v.  Roche,  116  N  Y.  120  (22  N.  E.  265)  ;  Rogers 

104 


CH.  IV.]  PARTIES   TO    BILLS   AND   NOTES.  §  49 

guardian  or  trustee,  described  as  such,  and  for  the  benefit 
of  the  trust  estate;  and  the  note  or  bill  is  transferred  by 
indorsement;  some  of  tlie  authorities  hold  that,  on  ac- 
count of  the  express  description  of  the  payee  as  guardian 
or  trustee,  the  indorsee  cannot  claim  to  be  a  bona  fide 
holder;  and  not  only  will  he  not  be  able  to  hold  the 
guardian  or  trustee  personally  liable,  but  he  takes  it 
subject  to  all  defenses,  which  may  arise  from  a  diver- 
sion of  such  note  or  bill  from  the  purposes  of  the 
trust. ^  But  where  the  indorsee  has  no  actual  notice  of 
a  breach  of  trust,  and  it  is  a  bona  fide  purchase  for  cash 
of  such  a  note  or  bill,  the  indorsee  is  a  bona  fide  holder, 
and  takes  the  paper  free  from  any  defenses,  growing  out 
of  any  secret  diversion  of  trust  funds,  even  though  the 
instrument  is  made  payable  to  the  guardian  or  trustee, 
described  as  such.^  Where  the  note  or  bill  is  made  paya- 
ble to  the  guardian  or  trustee,  without  describing  him  as 
such,  there  can  bo  no  question,  not  only  as  to  the  bona  fide 
ownership  of  the  indorsee,  but  also  as  to  the  personal 
liability  of  the  guardian  or  trustee  on  his  indorsement.^ 
And  it  has  been  held  that  a  trustee  will  be  individually 
liable  on  a  note,  payable  to  him  as  trustee,  wlien  he  trans- 
fers it  by  indorsement;  even  though  the  will,  by  which  the 
trust  estate  was  established,  empowered  him  to  make  such 
transfer  by  indorsement:,  unless  he  inserts  in  the  indorse- 
ment an  express  stipulation  that  he  is  not  individually 
liable.* 

The  same  principles  apply  in  determining  the  liability  of 

V.  Rogers,  111  N.  Y.  228  (18  N.  E.  636);  Burroughs  v.  Bunnell,  70  Md. 
18  (16  A.  447);  Pike  v.  Baldwin,  68  Iowa,  263  (26  N.  W.  441);  Miller  v. 
Redwint',  75  Ga.  130. 

1  Sturtevant  v.  Jaques,  14  Allen,  523;  Shaw  v.  Spencer,  100  Mass.  382 
(97  Am.  Dec.  107);  Baughn  v.  Shackleford,  48  Miss.  255;  Smith  v.  I)ib- 
rell,  31  Tex.  239  (98  Am.  Dec,  526);  Nickerson  v.  Gilliam,  29  Mo.  456 
(77  Am.  Dec.  583). 

2  Fountain  v.  Anderson,  33  Ga.  372;  Westmoreland  v.  Foster,  60  Ala. 
448;  Thornton  v.  Rankin,  19  Mo.  193. 

3  Knowlton  v.  Bradley,  17  N.  H.  458  (43  Am,  Dec  609). 

*  Roger  Williams  Nat.  Bank  u.  Groton  Mfg.  Co.,  16  R.  I.  504  (17  A.  170). 

105 


§   49  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

an  executor  or  administrator,  as  a  party  to  a  bill  or  note, 
signed  by  him  in  iiis  representative  capacity.  He  is  not 
authorized  to  bind  the  estate  by  any  note  or  bill,  which  he 
may  execute,  although  it  may  be  issued  in  settlement  of  a 
debt  due  by  the  estate.  He  is  individually  bound  as  maker 
of  such  a  note,  or  drawer  of  such  a  bill,  even  though  the 
signature  is  stated  in  the  most  explicit  manner  to  have  been 
made  in  his  representative  capacity. ^  If  there  is  no  fresh 
consideration  for  the  executor's  note,  it  is  held,  as  against 
every  one  but  a  subsequent  hona  fide  holder,  that  he  will 
not  be  liable  beyond  the  assets  which  he  actually  receives 
from  the  estate  of  the  decedent. ^  And  his  liability  will  be 
limited  to  the  amount  of  such  assets,  wherever  he  expressly 
limits  his  obligation  to  payment  out  of  the  assets  of  the 
estate.^ 

The  executor  or  administrator  is  also  personally  liable  as 
acceptor  of  a  bill,  drawn  against  him  as  such,  even  though 
he  adds  to  his  signature  his  official  designation,  at  least  as 
against  bona  fide  holders.*  But  whore  the  drawer  and 
payee,  and  particularly  the  latter,  were  informed  at  the  time 
of  acceptance,  that  the  executor  accepted  in  his  representa- 
tive capacity,  and  only  undertook  to  pay  the  bill  out  of 
whatever  assets  of  the  estate  may  be  realized,  such  payee 
cannot  hold  the  accepting  executor  beyond  the  amount  of 
such  assets.* 

Where  the  executor  or  administrator  is  the  payee  of  a 
note  or  bill,  as  long  as  he  does  not  transfer  it  by  indorse- 

1  Walker  v.  Patterson,  36  Me.  273;  Funderburk  v.  Gorham,  46  Ga.  296 
(note  given  for  property  purchased  for  estate)  ;  Bank  of  Troy  v.  Top- 
ping, 13  Wend.  657;  Ritteuhouse  v.  Ammerman,  64  Mo.  197  (27  Ana.  Rep. 
215) ;  Kessler  v.  Hall,  64  N.  C.  60;  Christian  v.  Morris,  50  Ala.  585. 

2  Davis  V.  French,  20  Me.  21  (37  Am.  Dec.  36);  Byrd  u.  Holloway,  6 
Smedes  &  M.  199. 

3  Serle  v.  Waterworth,  4  Mees.  &  W.  9;  Bank  of  Troy  v.  Topping,  9 
Wend.  273;  Kirkman  v.  Benham,  28  Ala.  501.  But  there  must  be  some- 
thing more  than  signing  his  name  as  "executor"  or  "administrator." 
Tryon  v.  Oxley,  3  Green  (Iowa),  289. 

^  Tassey  v.  Church,  4  Watts  &  S.  141  (39  Am.  Dec.  65). 
»  Schmlttler  v.  Simon,  114  N.  Y.  176  (21  N.  E.  162). 

106 


CH.   IV.]  PARTIES    TO    BILLS    AND    >OTES.  ILL.   CAS. 

lucnt,  he  may  treat  it  as  his  own  private  property  or  iu- 
ckide  it  in  the  assets  of  the  estate;  aiui  maiutain  an  action 
on  it  in  his  personal  or  representative  capacity,  according 
to  his  election.^  The  personal  representative  has  the  right 
in  any  case  to  transfer  such  paper  by  indorsement. ^  But 
he  will  be  individually  liable  on  such  an  indorsement, 
unless  he  makes  the  indorsement  without  recourse  to  him- 
self individually.^ 


ILLUSTRATIVE  CASES. 


Noel  V.  Kinney,  lOG  N.  Y.  74  (12  N,  E.  351), 

Barrett  v.  Dodge,  IG  R.  I.  740  (19  A.  530). 

Merchants'  Nat.  Bank  v.  Citizens'  Gaslight  Co.,  159  Mass.  505  (34  N.  E. 

1083). 

Casco  Nat.  Bank  v.  Clark,  139  N.  Y.  307  (34  N.  E.  908). 

Frankland  v.  Johnson,  147  111.  520  (35  N.  E.  480). 

Sparks  v.  Despatch  Transfer  Co.,  104  Mo.  531  (15  S.  W.  417) . 

Schmittler  v.  Simon,  114  N.  Y.  176  (21  N.  E.  172). 

Liability  of  AVif e  on  Promissory  Xote  —  A  Partner  Avith 
Her  Husband. 

Noel  V.  Kinney,  lOG  N.  Y.  74  (12  N.  E.  351). 

Danfoktii,  J.  The  action  is  upon  a  note  signed  "J.  P.  Kin- 
ney &  Co.,"  payable  to  the  order  of  plaintiffs  at  bank,  for  §505, 
value  received.  The  complaint  contains  alligations  usual  in  such 
cases,  and  sufficient  to  charge  the  defendants  as  partners  under 
the  name  affixed  to  the  note.  Fredericka  M.  Kinney  alone 
answered,  and  her  sole  defense  is  that  at  the  time  stated  she  was 
a  married  woman,  and  that  the  note  was  executed  and  delivered 
by  lier  husband.  But  there  is  no  allegation  that  it  was  made 
without  her  knowledge  and  consent,  nor  that  it  was  made  with- 

1  Bogert  V.  Ilertell,  4  Hill,  503;  Fry  u.  Evans,  8  Wend.  530;  Litchfield 
V.  Flint,  104  N.  Y.  543  (11  N.  E.  58)  (treated  as  his  personal  property)  ; 
Thomas  v.  Relfe,  9  Mo.  377;  Clampitt  v.  Newport,  8  La.  Ann.  124;  Cra- 
vens V.  Logan,  7  Ark.  103  (will  by  administrator  de  bonis  non). 

2  NeuhofE  V.  O'Reilly,  93  Mo.  1G4  (G  S.  W.  78);  Makepeace  v.  Moore, 
11  111.  474;  Taylor  v.  Surget,  14  Ilun,  IIG;  Clark  v.  Moses,  50  Ala.  326. 
Where  a  note  is  payable  to  executors  or  administrators,  and  there  are 
more  than  one,  all  must  join  in  the  indorsement.  Smith  v.  Whitney,  9 
Mass.  334;  Johnson  v.  Mangum,  G5  N.  C.  14G;  Sanders  v.  Bain,  G  J.  J. 
Marsh.  44G  (22  Am.  Dec.  86).     But  see  Bogert  v.  Ilertell,  4  IliH,  492. 

3  Forster  v.  Fuller,  6  Mass.  58;  Livingston  v.  Gaussen,  21  La.  Ann. 
286  (99  Am.  Dec.  731). 

107 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CII.   IV. 

out  her  authority.  Upon  the  trial  the  plaintiff  put  the  note  in 
evidence,  and  the  defendant  proved  her  marriage  with  the  other 
defendant.  But  there  was  evidence  from  wliich  the  juiy  might 
have  found  that  she  was  the  owner  of  improved  real  estate  in  the 
cit}^  of  Brooklyn  ;  that  the  consid.  ration  of  the  note  was  the  pur- 
chase price  of  mirrors  placed  in  houses  built  upon  her  land  ;  and 
that  the  mirrors  were  unpaid  for.  The  note  was  fail  ly  taken,  and 
the  consideration  delivered  upon  the  representation  by  the  hus- 
band that  the  wife  was  the  sole  owner  of  the  property-,  and  that 
the  name  of  J.  P.  Kinney  &  Co.  was  used  as  mere  matter  of  con- 
venience in  transacting  her  business.  It  does  not  appear  that 
there  was  any  business  except  in  relation  to  the  houses.  No 
question  was  made  as  to  the  authority  of  defendant's  husband  to 
execute  the  note,  nor  as  to  the  truth  of  his  representations. 

The  defendant  Fredericka  moved  to  dismiss  the  complaint  upon 
the  ground  that  as  to  her  the  note  was  invalid,  "its  form,"  as 
her  counsel  stated,  "  sliowing  it  was  not  given  in  respect  to  her 
separate  business  or  estate."  The  trial  judge  directed  a  verdict 
for  the  plaintiff,  subject  to  the  opinion  of  the  court.  It  was  so 
rendered,  but,  on  motion  of  the  defendant's  counsel,  afterwards 
set  aside  by  the  same  judge,  and  judgment  ordered  for  the  de- 
fendant. Exceptions  taken  by  the  plaintiffs  to  this  ruling  were 
directed  to  be  heard  in  the  first  ins' ance  at  general  terra,  judg- 
ment in  the  meantime  to  be  suspended.  The  general  term  over- 
ruled the  exception,  and  ordered  judgment  for  the  defendant. 

It  is  obvious  that  the  contract  in  fulfilhnent  of  which  the  note 
was  given  was  of  value  to  the  defendant,  for  by  it  she  acquired 
articles  for  the  improvement  of  her  piopert3\  She  retains  those 
articles,  and  has  so  far  avoided  payment  upon  the  ground  that 
she  and  her  husband,  upon  contracting  and  consummating  mar- 
riage, became  one  person,  and  so  incapable  of  thenceforth  con- 
tracting one  with  the  other;  that,  therefore,  they  could  not  be 
partners,  and,  as  the  contract  sued  on  was  in  form  a  copartner- 
ship contract,  it  could  not  be  enforced  against  her.  If  this  is 
the  present  rule  of  law,  then  the  statutes  which  enable  the  woman 
to  acquire  and  hold  property,  to  barizain,  sell,  assign  and  trans- 
fer it,  to  carry  on  any  trade  or  business,  and  perform  any  labor 
or  service  on  her  own  account,  and  which  protect  her  in  the 
enjoyment  of  her  earnings  from  her  trade,  business,  labor  or  ser- 
vices, and  permit  her  to  use  and  invest  those  earnings,  are  effect- 
ual only  so  far  that  she  may,  alone  or  jointly  with  any  person  or 
persons  save  her  husband,  derive  profit  and  increase  from  her 
work,  and  gain  from  the  use  of  hei'  estate.  If  they  are  to  be  so 
limited  in  her  favor,  they  may  easily,  as  in  this  instance,  become 
not  merely  enabling  statutes  for  her  benefit,  but  also  in  her  hands 
instrumentalities  of  fraud. 

Upon  the  precise  question  presented  the  opinion  of  the  court 
below  assumes  that  the  decisions  of  other  courts  are  conflicting; 
but  we  are  referred  to  no  case  in  this  court  where  a  woman  has 
successfully  asserted  her  coverture  as  a  defense  to  an  action  for 

108 


err.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

tlie  price  of  goods  purcliased  by  ber,  and  I  am  unable  to  see  wby, 
as  against  creditors,  sbe  should  be  permitted  to  interpose  the 
mere  form  of  her  promise  as  an  obstacle  to  their  recovery.  It  is 
settled  that  the  things  which  the  statute  above  referred  to  permit 
her  to  do  in  person  she  may  also  do  by  another  as  her  agent. 
Tlrs  is  necessarilv  so,  for  she  is  allowed  to  act  in  respect  to  them 
a'*  if  unmarried  ;  and  it  cannot  be  doubted  that  the  improvement 
of  her  hind,  or  the  management  of  her  personal  property,  whether 
for  preservation  or  Ixisiness,  may  be  conducted  by  her  by  means 
fif  any  agency  which  anv  other  owner  of  property  might  emplo}', 
and  that  the  produce  and  increase  thereof  will  be  hers.  Knapp 
V.  Smith,  27  N.  Y.  278;  Al)bey  v.  Deyo,  44  N.  Y.  344.  So  she 
may  do  those  things  througti  lier  husband  as  her  agent.  Abbey 
V.  Diyo,  supra;  Kowe  v.  Smith,  45  N.  Y.  230.  She  may  also 
liave  such  a  community  of  interest  with  him  in  relation  to  real 
estate  as  will  nnder  her  liable  for  his  frauds  relating  to  it;  and 
when  he,  professing  to  act  as  her  ajent,  makes  false  representa- 
tions, although  without  her  knowledge,  and  she  receives  the  pro- 
ceeds, she  cannot  retain  tlie  fruits  of  his  fraud.  Krumm  v.  Beach, 
96  N.  Y.  398. 

Again,  as  to  all  contracts  relating  to  her  separate  estate,  or 
made  in  the  course  of  her  separate  business,  she  stands  at  law 
on  the  same  footing  as  if  unmarried,  and  can  therefore  make  iie- 
gotiable  paper  which  will  be  governed  by  the  law-merchant,  and 
can  be  sued  upon  in  the  ordinary  way  by  general  complaint,  and 
without  special  statements.  Frecking  v.  RoUand,  ho  N.  Y.  422. 
Nor  can  she  escape  liability  because  she  and  her  husliand  are 
joint  makers  of  the  note  sued  on.  In  Frecking  v.  Holland,  supra, 
tlie  action  was  ujion  a  promissory  note  si<j:ned  by  the  defendants, 
who  were  husl)nnd  and  wife.  He  set  up  usury,  and  she  set  up 
coverture.  The  court  directed  a  verdict  for  the  wife,  and  the 
jury  gave  a  verdict  against  the  husband.  The  creditor  appealed. 
The  general  term  aflirmed  the  verdict  in  favor  of  the  wife,  and 
the  creditor  api)ealed  to  this  court.  Against  the  appeal  it  was 
argued  (1)  that  being  a  married  woman,  she  was  not  liable  for 
the  note  in  suit;  (2)  that  the  complaint,  being  general  and  not 
specitic,  was  insulHcient  to  charge  her  property.  Neither  objec- 
tion prevailed,  and  the  judgment  in  her  favor  was  reversed.  There 
the  hu'sliand  acting  for  himself,  and  as  the  agent  of  his  wife,  bor- 
rowed money  with  which  to  pay  for  a  factoiy  bought  by  her.  The 
mom-y  was  loaned  to  tiiera,  and  was  in  part  so  applied.  The  note 
was  given  for  the  money  loaned,  and  for  services.  The  court,  in 
answering  the  defendant's  objectioi.s,  show  tl  at  the  capacity  of  a 
married  woman  to  make  con  racts  relating  to  her  separate  busi- 
ness is  incident  to  the  power  to  conduct  it,  for  the  latter  would  be 
barren  and  useless  if  (lisconnectcd  with  the  right  to  conduct  it  in 
the  way  and  by  the  means  usually  ( ni|)lovcd.  In  the  case  cited 
she  became  a  joint  contractor  with  her  husband,  but  she  was  as 
much  bound  to  ptM-form  the  joint  engageinont  as  if  the  undertak- 
ing had  been  several,  anil  she  dul  not  escape  liability  because  her 

109 


ILL.  CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH     IV. 

joint  contractor  was  her  husband.  It  was  not  necessary  to  in- 
quire in  that  case  whether  the  one  paying  could  obtain  contribu- 
tion from  the  other,  nor  is  it  necessary  to  go  into  that  question 
here.  In  that  case  both  undertook  to  pay  the  creditor ;  in  this 
case  both  undertook  to  pay  the  creditor.  Can  it  make  a  difference 
in  the  measnres  of  liability  that  in  one  case  the  married  woman 
entered  in  her  own  name  and  her  husband  in  his  name  in  the  exe- 
cution of  a  joint  obligation,  and  in  the  other  case  a  name  which 
represents  also  joint  Uability,  but  which  may  in  effect  also  be 
several ? 

Partners  are  at  once  principals  and  agents.  Each  represents 
the  other,  and  if  in  the  relation  of  partnership,  there  are  obliga- 
tions which  a  married  woman  cannot  enforce  against  her  husband, 
or  the  husband  against  the  wife,  they  involve  no  feature  of  the 
present  action,  which  asserts  only  the  obhgation  of  a  debtor  to 
discharge  her  debt,  or  the  obligation  of  a  promisor  to  fulfill  her 
promise.  More  like  the  present  case  is  that  of  Scott  v.  Conway, 
58  N.  Y.  619,  where,  in  an  action  for  the  price  of  labor  and 
materials  supplied  to  a  theater  carried  on  by  Sarah  T.  Conway 
and  her  husband,  Frederick  B.,  under  the  name  of  "Mrs.  B.  F. 
Conway's  Brooklyn  Theatc,"  and  in  which  the  wife  and  husband 
were  jointly  interested,  it  was  held  to  be  no  defense,  against  one 
who  dealt  with  her  in  ignorance  of  the  partnership,  that  she  had 
a  dormant  partner,  and  that  the  rule  was  not  changed  by  the 
fact  that  the  partner  was  her  husband.  In  Bitter  v.  Rathman,  61 
N.  Y.  512,  it  was  held  that  a  married  woman  who,  in  secret  trust 
for  her  husband,  becomes  a  member  of  a  copartnership,  is  to  be 
regarded  as  the  owner  of  the  interest  she  represents,  and  might 
maintain  an  action  for  the  dissolution  of  the  copartnership,  and 
for  an  accounting.  The  defendant  in  that  case  denied  that  she 
was  a  partner,  and  claimed  that  he  alone  was  interested  in  the 
business ;  claiming  that,  being  a  married  woman,  she  could  not 
in  law  be  h's  partner.  The  court  held  otherwise,  and  also  that, 
having  suffered  herself  to  be  regarded  by  tie  public  as  a  partner, 
she  was  liable  as  such  to  the  creditors  of  the  ostensible  firm, 
although  it  might  be  otherwise  as  reg.irded  her  hu-band  and  his 
creditors,  but  as  to  any  liabilities  of  tlie  ostensible  firm  she  would 
be  entitled  to  protection  as  against  the  defendant  and  her  husband. 

It  would  seem  therefore  that,  by  becoming  a  partner  either  with 
a  husband  or  another  person,  a  married  woman  loses  no  right  of 
property.  And  no  principle  is  suggested  upon  which  her  estate  can 
be  increased  at  the  expense  of  cr*  ditors,  nor  how  either  in  her  own 
name,  or  in  her  own  name  and  that  of  another,  or  with  another,  she 
can  purchase  goods  on  credit  to  the  advantage  of  her  separate 
estate,  and  not  become  hable  for  its  payment.  In  Coleman  v.  Burr, 
93  N.  Y.  17,  cited  by  the  appellant,  the  sole  question  was  whether 
the  conveyance  of  property  by  the  husband  to  his  wife  was  sus- 
tained by  a  consideration  good  as  against  his  creditors  who  im- 
peached it.  Here  the  wife  was  as  capable  of  contracting  as  if  she 
had  been  unmarried, —  as  capable  of  adding  to  her  estate  by  fresh 

110 


CII.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.  CAS. 

acquisitions ;  and  she  should  not  be  permitted  to  escape  payment 
by  joining  to  her  own  name  that  of  her  husband,  or  by  comlDining 
the  two  into  a  firm  or  partnership  name.  It  was  by  that  name 
she  chose  to  contract,  and,  as  between  herself  and  creditor,  she 
is  bound  by  it.  Individuals  may  be  liable  as  partners  to  third 
persons,  while,  as  between  therasi  Ives,  they  are  not. 

Here,  then,  the  question  is  not  between  husband  and  wife. 
Assume  that  as  to  and  with  him  she  has  no  capacity,  it  by  no 
means  follows  that  she  sliall  not  he  held  upon  a  contract  made  by 
him  upon  a  consideration  moving  to  her,  where  a  third  person, 
who  parted  with  tliat  consideration  in  reliance  upon  the  husl)and's 
apparent  agency,  seeks  to  enforce  the  contract.  If  the  adoption 
of  a  firm  name  was  a  mere  contrivance  to  carry  on  the  business 
jointly,  and  at  tlie  same  time  to  put  the  property  acquired  and 
added  to  the  wife's  separate  property  out  of  the  reach  of  creditors 
dealing  with  either  bona  fide  as  the  partner  of  the  other,  it  should 
not  be  permitted  to  have  tliat  effect.  If,  as  the  testimony  shows, 
the  wife  was  the  sole  owner  of  the  property,  that  the  husband  had 
no  interest  in  it,  but  that  for  convenience  they  were  doing  her 
business  in  the  name  of  J.  P.  Kinney  &c  Co.,  her  liabiUty  for  a  debt 
contracted  in  that  name  is  entirely  consistent  witli  the  fact,  if  it 
be  a  fact  that,  as  l)Ctween  the  parties  themselves,  no  partnership 
exists.  This  is  so,  although  the  plaintiff  alleges  in  the  complaint 
that  the  defendants  are  partners,  and  that  allegation  is  not  denied. 
For  the  purposes  of  tlie  action  it  may  be  true.  The  plaintiff  gave 
credit  to  them  as  sucli,  but  the  goods  he  sold  were  intended  by 
them  to  be  annexed  to  the  wife's  separate  estate,  and  they  were 
so  annexed.  If  tlie  arrangement  was  valid  between  all  parties, 
there  is  no  pretense  of  a  defense.  If  invalid  only  as  between  the 
defendants,  the  wife,  who  received  the  fruits  of  the  transaction, 
cannot,  as  agaiu'^t  a  creditor,  assert  its  invalidity.  Although 
married,  she  may  be  estopped  by  her  acts  and  declarations  in  any 
matter  in  respect  of  wliich  slie  is  capal)le  of  acting  sni  juris. 
Bodine  v.  Killeen  ;V5  N.  Y.  93.  In  this  instance  the  plaintiff 
proved  the  contract,  that  it  was  made  ])y  her  autliorized  Mgent,  and 
that  it  had  reference  to  the  improvement  and  benefit  of  her  sepa- 
rate estate.  She  had  capacity  to  do  all  thise  th  ngs,  and,  if  tlie 
arrangement  which  led  to  the  use  of  her  husband's  name  as  joint 
promisor  or  partner  was  beyond  her  power  to  enter  into,  she  must 
meet  tliat  liability  without  regard  to  any  question  whether  her 
husband  is  also  liable,  or  as  to  what  rights  of  indemnity  or  other- 
wise she  niigiit  have  against  him.  She  was  a  principal,  and  he 
was  her  agent.  He  neither  exceeded  his  power,  nor  were  her 
acts  to  his  prejudice,  and  if,  i)v  reason  of  any  technical  incapac- 
ity, they  could  not  contract  with  each  other  or  together,  as  con- 
stituting that  artificial  entity,  a  firm  of  eopartnersliip  (a  question 
we  do  not  decide),  she  is  lial)le,  and  the  contract  enforcible 
against  her  in  favor  of  the  |)laintiff,  whose  property'  has  been 
added  to  her  estate  upon  tlie  strength  of  a  promise  made  in  her 
name  by  her  authorized  agent. 

Ill 


ILL.  CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

We  tliiuk  the  court  erred  in  directing  judgment  for  the  defend- 
ant. It  should  be  reversed,  and  the  plaintiff  have  judgment  upon 
the  verdict.     All  concur. 


Partnership  Note  —  Conflict  of  Law  —  What  Constitutes 
Sufficient  Delivery. 

Barrett  v.  Dodge,  16  R.  I.  740  (19  A.  530). 

Matteson,  J.  This  is  an  action  of  asstimpsit  ou  two  promissory 
notes.  The  first  is  for  $1,106.12,  datt  d  at  New  York,  December 
28,  1886,  and  made  payable  to  the  order  of  William  E.  Dodge  & 
Son,  12  months  after  date.  The  second  is  for  $200,  dated  at 
Baltimore,  Md.,  January  27,  1887,  and  also  made  payable  to  the 
order  of  William  E.  Dodge  &  Son,  4  months  after  date,  with 
interest  at  6  per  cent  per  annum.  The  plaintiff  claim*  dthat  both 
notes  were  indorsed  and  delivered  to  him  by  the  payees  before 
maturity,  for  their  full  value  on  account  of  his  guaranty  of  the 
indebtedness  of  the  payees  to  Barritt  Bros.  &  Co.,  of  which  firm 
the  plaintiff  was  a  member.  The  defense  was  that  the  notes  were 
so  indorsed  and  delivered  after  maturity,  and  that  the  note  for 
$1,106.12  had  been  renewed  for  another  year,  which  had  not 
elapsed  at  the  bringing  of  the  suit,  and  that  the  $200  note  had 
been  paid  or  satisfied  by  the  terms  of  a  written  agreement  between 
the  defendant  and  the  pay*  es  made  contemporaneously  with  the 
note.  The  case  was  tried  in  this  court,  and  resulted  in  a  verdict 
for  the  defendant.  The  plaintiff  moved  for  a  new  trial  for  alleged 
misruliugs.  At  the  trial  the  plautiff  called  as  a  witness  Fred  A. 
Dodge,  of  the  firm  of  William  E.  Dodge  &  Son,  the  pa3ees  of  the 
notes,  who  testified:  "Shortly  after  the  $1,106.12  note  was 
received,  and  before  maturit}',  about  the  time  it  was  received,  we 
indorsed  and  assigned  it  over  to  George  P.  Barrett,  the  plaintiff, 
for  its  full  value,  on  account  of  our  indebtedness  to  Barrett  Bros. 
&  Co.,  for  which  he  was  our  guarantor."  In  cross-examination 
of  this  witness  the  court,  against  the  plaintiff's  objection,  per- 
mitted a  letter,  written  by  the  witness,  to  be  read  to  the  jury,  of 
which  the  following  is  a  copy  of  the  material  portion :  "Balti- 
more, Md.,  January  3,  1888.  C.  G.  Dodge,  Jr.,  214  W.  5oth 
street,  N.  Y. —  Dear  Sir:  Inclosed  please  find  note,  which  please 
sign  and  return.  Your  note  due  31st  ult.  was  f  jr  $1,106.12-100  ; 
$63.88,  twelve  months'  interest, —  $1,172.50.  We  made  no 
demand  for  it,  as  we  knew  you  were  in  bad  &hape.  *  *  * 
Wm.  E.  Dodge  &  Son."  The  plaintiff  excepted  to  the  ruling 
permitting  the  reading  of  the  letter.  We  do  not  think  t' e  court 
erred.  If  the  testimony  of  the  witness  in  his  direct  examina- 
tion, that  the  note  in  question  had  been  indorsed  or  assigned  to 
the  plaintiff  soon  after  it  was  given,  nearly  a  year  before  tiie  let- 
ter was  written,  was  correct,  it  might  be  regarded  as  a  somewhat 
unusual  proceeding  for  him  to  have  written  the  letter  inclosing 
the  new   note  in  renewal  of  the  old,  and  excusing  the  failure  to 

112 


CH,   JV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

make  a  demand  upon  tlie  old  note  wlien  it  became  due.  It  was 
precisely  such  a  letter  as  William  E.  Dodge  &  Son  might  have 
written  had  they  continued  to  be  the  owners  of  the  note.  It, 
therefore,  in  view  of  tiie  direct  testimony  of  the  witness,  called 
for  explanation,  and,  if  not  satisfactorily  ex|)lained,  would  be 
likely  to  affect  the  judgment  of  the  jury  in  relation  to  the  credi- 
bility of  the  witness.  We  think,  therefore,  that  it  was  properly 
admitted  in  cross-examination  of  the  witness,  for  the  purpose  of 
affecting  his  credibilit}'. 

The  court,  in  its  charge  to  the  jury,  instructed  theni  that  both 
the  notes  declared  on  were  to  be  considered  by  them  as  subject  to 
the  equities  between  the  payees  and  the  maker,  according  to  the 
law  of  New  York  as  set  forth  in  the  di  cisions  of  the  court  of  that 
State,  which  had  been  put  in  evidence,  and  not  according  to  the 
law  of  Mar3land  or  of  this  State.  To  this  it  slructidu  the  plaintiff 
duly  excepted.  The  evidence  shows  that  the  noti  s  were  drawn 
by  Fred.  A.  Dodge  in  Baltimore,  and  were  sent  by  him  to  the 
defendant  in  New  York  for  his  signature;  that  the  defendant 
signed  Ihtm  in  New  Y'ork,  and  returneil  them  to  the  payees  by 
mail.  No  i)articular  place  of  payment  is  specified  in  either  note. 
The  authorities  agree  that  if  no  particular  pi  ice  of  payment  is 
specified  in  a  note,  or  if,  in  other  words,  it  is  payable  generally, 
the  law  of  the  place  where  it  is  made  determines,  not  only  its 
construction,  but  also  the  obligation  and  duty  it  imposes  on  the 
maker.  And  therefore  the  maker  ma}'  av;iil  himself  of  an}'  equit- 
able defenses  given  to  him  by  the  law  of  the  place  where  the  note 
is  made.  Story  Prom.  Notts,  §  172;  2  Pars.  Noles,  318,  338, 
358;  Stacy  r.  Baker,  1  Scam.  417;  Evans  v.  Anderson,  78  111. 
558  ;  Y'oung  v.  Harris,  M  B.  Mon.  4\~i  ;  Allen  r.  Brattou,  47  JMiss. 
119.  By  the  place  where  the  note  is  made  is  not  meant  the  place 
where  it  is  written,  signed,  or  dated,  but  the  place  where  it  is 
delivered,  delivery  being  essential  to  its  consummation  as  an 
obligation.  So  long  as  it  remains  in  the  possession  of  the  maker, 
he  is  under  no  ol)iigation  whatever  by  reason  of  it,  and  it  becomes 
binding  iqjon  him  only  when  he  has  parted  witli  its  dominion  and 
control  by  delivering  it  to  th )  payee.  Freese  v.  Brcwnell,  3.5  N. 
J.  Law,  28.");  Hopper  v.  Eiland,  21  Ala.  714;  Chamberlain  v. 
Hopps,  8  Vt.  94;  Marvin  v.  McCullum,  20  Johns.  288.  The 
correctness  of  the  instruction  complained  of  drptnds,  therefore, 
upon  whether  the  notes  are  to  be  regarded  as  having  been  deliv- 
ered in  New  York  or  Baltimore.  We  think  they  are  to  be 
regarded  as  delivered  in  Now  Y'ork.  They  were  st  nt,  as  has  been 
stated  by  the  payees  in  Baltimore,  to  the  mak<.  r,  in  New  Yoik, 
ftjr  Ills  signature.  In  tlie  absence  of  instructions  to  the  maker  as 
to  the  mode  by  which  he  should  return  them  when  signed,  the 
payees  nuist  have  contemplated  that  Ihc  maker  would  return  them 
by  tlie  n.atural  and  ordinaiy  mode  of  transmitting  such  obliga- 
tions, and  must  be  deemed  to  have  authorized  him  to  so  return 
them.  The  natural  and  ordinary  mode  of  transmitting  them  was 
the  mail, —  the  mode  adopted  by  the  maker.     In  such  cases  the 

8  113 


ILL.   CAS.  VARTIES    TO    BILLS    AND    NOTES.  [CH     IV. 

post-office  may  be  regarded  as  Uie  common  agent  of  both  par- 
ties,—  of  the  maker,  for  the  purpose  of  transmitting  the  note  ;  and 
of  the  payee,  for  the  purpose  of  receiving  it  from  the  maker.  By 
depositing  the  note  in  the  mail,  with  the  intent  that  it  shall  be 
transmitted  to  the  payee  in  the  usual  wa^',  the  maker  parts  ■with 
bis  dominion  and  control  over  it,  and  the  deUvery  is,  in  legal 
contemplation,  complete.  Kirkman  v.  Bank,  2  Cold.  397  ;  Insur- 
aoce  Co.  V.  Grant,  4  Exch.  Div.  216,  also  32  Amer.  Rep.  note, 
p.  40  ;  King  v.  Larabton,  5  Price,  428  ;  1  Add.  Cont.  18,  and 
cases  cited  in  note. 

The  plaintiff  also  moves  for  a  new  trial  on  the  ground  that  the 
verdict  is  against  the  evidence  and  the  weight  thereof.  The 
testimony  in  behalf  of  the  plaintiff,  in  relation  to  the  indorsement 
and  delivery  of  the  notes  to  him  as  security  for  his  guaranty  of 
the  indebtedness  of  the  payees  to  Barrett  Bros.  &  Co.,  it  is  true 
was  not  contradicted ;  but  it  also  appeared  from  the  plaintiff's 
own  testimony  that  he  knew  the  defendant  was  in  poor  circum- 
stances when  he  took  the  notes  as  security,  that  he  made  no 
attempt  to  collect  them  when  due,  neither  making  demand  on  the 
maker  nor  notifying  the  indorsers,  because  he  says  he  knew  they 
were  unable  to  pay  them.  And  it  further  appe  red  that  neither 
the  books  of  William  E.  Dodge  &  Son,  nor  those  of  Barrett  Bros. 
&  Co.,  contained  any  entries  wi  h  referi  nee  to  the  notes.  And, 
as  affecting  the  credibilit}^  of  the  wiinessi  s  William  E.  Dodge  and 
Fred.  A.  Dodge,  it  appeared  that  William  E.  Dodge  &  Sou  had 
written  several  letters  to  the  defendant,  wit'iout  the  knowledge  or 
auth  rity  of  the  plaintiff,  although  the  relations  between  them  and 
the  plaintiff  were  intimate,  afttr  the  notes,  as  it  was  claimed,  had 
passed  into  the  ownership  of  the  plaintiff ;  which  letters,  it  was 
argued  by  the  defendant,  were  inconsistent  with  the  plaintiff's 
ownership  of  the  notes,  as  testifitd  by  the  witnesses,  and  were 
consistent  only  with  the  tlieory  that  they  were,  at  the  time  the 
letters  were  written,  still  the  pre  perty  of  the  payees.  The  jury 
had  the  right  to  consider  all  these  matters  as  well  as  the  contract 
and  appearance  of  the  witnesses  in  testifying,  in  weighing  the 
testimony,  and  had  the  right  to  reject  the  testimou}^  of  any  wit- 
ness, though  uncontradicted,  which  did  not  commend  itself  to 
them  as  reasonable  or  proba  le,  in  view  of  the  whole  testimoo}-, 
and  of  their  knowledge  or  experii  nee  of  the  ordinary  conduct  of 
men  in  similar  circumstances.  Moreover,  it  did  not  api)ear  that, 
up  to  the  bringing  of  the  suit,  the  plaintiff  had  ever  been  called 
upon  to  pay  or  had  paid  any  portion  of  the  indebtedness  of 
William  E.  Dodge  &Son  to  Barrett  Bros.  &  Co.  under  his  guar- 
anty, or  that  the  guaranty  imposed  any  lepal  liability  on  the 
plaintiff  for  such  indebtedness.  We  cannot  say  that  the  verdict 
was  not  authorized  by  the  evidence. 

The  plaintiff  also  moves  for  a  new  trial  on  the  ground  of  newly- 
discovered  evidence,  the  newly-discovered  evidence  consisting  of 
the  copy  of  a  letter  in  the  letter-book  of  Barrett  Bros.  &  Co. 
written  by  the  plaintiff  to  the  defendant,  November  29,  1887, 
114 


Cir.  IV.]  PARTIES   TO    BILLS    AND   NOTES.  ILL.  CAS. 

notifying  him  that  tlie  plaintiff  held  the  §1,100.12  note,  and  re- 
questing the  defendant  to  pay  it.  The  plaintiff,  in  his  allidavit, 
sa3S  that  since  the  trial,  and  since  the  filing  *-f  his  motion  for  a 
new  trial,  he  accidentally'  discovered  the  copy.  He  does  not  set 
forth  that  he  could  not,  by  the  exercise  of  reasonable  diligence, 
have  ascertained  the  existence  of  the  copy  in  season  to  have  used 
it  on  the  irial,  nor  any  excuse  for  not  having  then  produced  it.  The 
cross-examination  of  William  E.  Dodge  and  Fred.  A.  Dodge,  on 
the  taking  of  thtir  deixisilions  pr  or  to  the  trial,  was  notice  to  the 
plaintiff  that  his  title  to  tlie  notes,  as  a  bona  lide  purchaser  for 
value  before  matuiii}',  was  disputed,  and  it  was  therefore  incum- 
Ijent  on  him  to  be  prepared  to  sustain  his  claim  at  the  trial  by  all 
the  evidence  in  his  control.  We  do  not  think  he  brings  himself 
within  the  rule  justifying  the  granting  of  a  new  trial  on  the  ground 
of  newly-discovered  evicknce.     Petition  dismissed. 


Power  of  Oflacer  to  Bind  Corporation  by  Note  Issued  in 
Excess  of  His  Autlioritj. 

Merchants'  Nat.  Bank  v.  Citizens'  Gaslight  Co.,  159  Mass.  505  (34  N.  E. 

10833. 

Exceptions  from  superior  court,  Norfolk  count}^ ;  James  R. 
Dunbar,  judge. 

Action  of  contract  by  the  Merchants'  National  Bank  of  Gardi- 
ner, Me.,  against  the  Citizens'  Gaslight  Company  of  Quincy  and 
others,  on  a  note  executed  in  its  beludf  by  C.  S.  J.  Ruggler,  as 
its  treasurer.  There  was  a  verdict  in  plaintiff's  favor,  and  de- 
fendant, the  Citizens'  Gaslight  Compan}',  excepted  to  the  court's 
refusal  to  rule  as  requested.     ExceiJiions  overruled. 

Baukku,  J.  1.  The  defendant's  first  request  for  instructions 
relat(  s  to  the  effect  of  .St.  1886,  c.  346,  upon  the  powers  of  the 
defendant  corp(uation  to  issue  promissory  notes.  The  third 
section  of  that  statute  relates'  to  the  issue  of  bonds  by  a  gas  com- 
pany, and  gives  a  company  the  right  to  secure  bonds  issued  in 
accordance  with  the  provisions  of  the  section  by  a  mortgage  of  the 
franch  se  and  property  of  the  company';  but  we  find  nothing  in 
the  cliapter  which  affects  the  right  of  such  a  company  to  issue 
promissor}-  notes  when  convenient  or  necessary  in  the  prosecution 
of  its  business. 

2.  As  the  plaintiff  discounted  this  note  before  maturity,  "in 
the  usual  course  of  its  business,  without  notice  or  knowledge  of 
any  defect  or  infirmity,"  and  as  its  good  faith  is  not  questioned, 
if  the  note  wrie  signed  by  an  olticer  authorized  generally  to  give 
notes  in  its  behalf  the  defendant  company  would  be  lia])le,  although 
the  agent  in  signing  this  particular  note  excecde<l  his  autlKM-iiy. 
or  the  powers  of  the  corporation.  ISIonument  Nat.  Hai  kr.  (JI(>i)e 
Woiks,  101  I\Iass.  67.  It  is  not  necessary  tliat  the  authority  of 
an  dllicer  or  agent  to  sign  notes  in  behalf  of  a  corporation  should 
appear  in  the  by-laws,  or  should  have  been  expressh'  given  by  ^ 

115 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

vote  of  the  directors  or  of  the  stockholders.  In  Lester  v.  Webb, 
1  Allen,  34,  it  was  said:  "  The  rule  is  well  settled,  that  if  a  cor- 
poration permit  their  treasurer  to  act  as  their  general  fiscal  agent, 
and  hold  him  out  to  the  public  as  having  the  general  authority 
implit  d  from  his  official  name  and  character,  and  by  their  silence 
and  acquiescence  suffer  him  to  draw  and  accept  drafts,  and  to 
indorse  notes  payable  to  the  corporation,  they  are  bound  by  his 
acts  done  within  the  scope  of  such  implied  authority.  Fay  v. 
Noble,  12  Cush.  1 ;  AVilliams  v.  Cheney,  3  Gray,  215  ;  Conover  v. 
Insurance  Co.,  1  N.  Y.  290.  On  the  facts  proved  at  the  trial  the 
plaintiff  might  well  claim,  il  the  jury  believed  the  evidence,  that 
the  treasurer  had  authority  to  in'^orse  the  notes  in  suit,  derived, 
not  from  an}"  express  direction,  but  from  the  course  of  conduct 
and  dealing  of  the  treasurer  with  tlie  knowledge  and  implied 
assent  of  the  directors  of  the  corporation."  See,  also,  McNeil -y. 
Chamber  of  Commerce,  145  Mass.  285  ;  28  N.  E.  Rep.  245  ;  Min- 
ing Co.  V.  Anglo-Cal  fornian  Bank,  104  U.  S.  192. 

3.  But  cases  where  the  actual  authority  of  an  officer  is  inferred 
from  a  couise  of  business  known  to  and  permitted  by  the 
stockholders  or  the  directors  of  a  corporation  do  not  touch 
the  question  whether  authorit}^  is  to  be  implied  as  matter 
of  law  from  the  name  and  nature  of  the  office  itself.  In 
the  present  case  the  jury  were  instructed  that  the  treasurer 
of  such  a  corporation  as  the  defendant  company  has  by 
virtue  of  his  office  authority  to  sign  a  note  which  shall  bind  the 
corporation,  and  the  defendant  contends  that  this  instruction  was 
incorrect.  The  incidental  powers  of  some  officers  or  agents  have 
become  so  well  known  and  defined,  and  have  be<  n  so  frequently 
recognized  by  courts  of  justice,  that  certain  powers  are  implied 
as  matters  of  law  in  favor  of  third  persons  who  deal  with  them  on 
the  assumption  that  they  possess  these  powers,  unless  such 
persons  are  informed  to  the  contrary.  The  officers  and  agents 
usually  mentioned  in  this  category  are  auctioneers,  brokers, 
factors,  cashiers  of  banks,  and  masters  of  ships.  See  Merchants' 
Bank  v.  State  Bank,  10  Wall.  604  ;  Case  v.  Bank,  100  U.  S.  446. 
Treasurers  of  towns  or  cities  in  this  commonwealth  are  well-known 
officers,  and  their  ])owers  are  very  limited.  They  are  in  general 
to  receive,  keep,  and  pay  out  money  on  the  warrant  of  the  proper 
officers  of  the  towns  and  cities.  Treasurers  of  business  corpora- 
tions usually  have  much  more  extensive  powers,  and  the  decisions 
of  this  court  hold  that  the  treasurer  of  a  manufacturing  and  trad- 
ing corporation  is  clothed  by  virtue  of  his  office  with  power  to  act 
for  the  corporation  in  making,  accepting,  indorsing,  issuing,  and 
negotiating  promissory  notes  and  b'lls  of  exchange,  and  that  such 
negotiable  paper  in  the  hands  of  an  innocent  holder  for  value, 
who  has  taken  it  without  notice  of  any  want  of  authority  on  the 
part  of  the  treasurer,  is  binding  on  the  corporation,  although 
with  reference  to  the  corporation  it  is  accommodation  paper. 
Narragansett  Bank  v.  Atlantic  Silk  Co.,  3  Mete.  (Mass.)  382; 
Bates  V.  Iron  Co.,  7  Mete.  (Mass.)  224;  Fay  v.  Noble,  12  Cush. 

116 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

1 ;  Lester  v.  Webb,  1  Allen,  34 ;  Bauk  v.  Winchester,  8  Allen, 
109  ;  Bird  v.  Daggett,  97  Mass.  494 ;  Monument  Nat.  Bank  v. 
Globe  Works,  ubi  supra;  Corcoran  v.  Cattle  Co.,  151  Mass.  74; 
23  N.  E.  Rep.  727.  While  it  is  possible  that  most,  if  not  all,  of 
the  cases  in  which  this  rule  has  been  slated  as  law  have  some 
spcc'al  circumstances  from  whicli  the  treasiinr's  authority  could 
be  inferred,  and  that  the  couit  was  influenced  in  the  decisions 
by  the  well  known  fact  that  in  man}^  of  the  manufacturing  cor- 
porations of  this  commonwealth  tlie  treasurer  not  only  has  the 
custody  of  the  money,  but  is  the  general  financial  manager,  and 
often  the  general  business  mannger,  of  the  corporation,  the  rule 
itself  has  been  frequently  and  broadly  stated  in  our  decisions,  and 
is  well  known  botli  to  the  officers  of  manufacturing  and  trading  cor- 
porations and  to  those  of  banks  and  financial  institutions.  It  could 
not  now  be  abrogated  or  unsettle  1  witi)oiit  disturbing  commer- 
cial transactions.  There  are,  however,  many  corporations  which 
transact  more  or  less  business  to  whicli  the  rule  has  been  held  not 
to  apply.  Thus  it  does  not  apply  to  a  college  (Webster  v.  Col- 
lege, 23  Pick.  302),  nor  to  a  ])arisli  (Packard  v.  Society,  10 
Mete.  [Mass.]  427),  nor  to  a  monument  association  (Torre}'  v. 
Association,  5  Allen,  327),  n  r  to  a  municipality  (Bank  v.  AVin- 
chester,  8  Allen,  109),  nor  to  a  savings  bank  (Tappan  v.  Bank, 
127  Mass.  107),  nor  to  a  horse-railroad  company  (Craft  v.  Rail- 
road Co.,  150  Mass.  207;  22  N.  E.  Rep.  920).  Upon  considera- 
tion of  the  decisions  cited,  we  think  it  fair  to  say  that  the  making 
and  indorsing  of  negotiable  paj)or  is  to  be  presumed  to  be  within 
the  i)ower  of  the  treasurer  of  a  manuf  icturing  and  trading  corpo- 
ration whenever  from  the  nature  of  its  ordinary  business  as  usu- 
ally conducted  the  corporation  is  naturally  to  be  expected  to  use 
its  credit  in  carrying  on  commercial  transactions.  Such  paper  is 
the  usual  and  ordinary  instrument  of  utilizing  credit  in  commer- 
cial transactions,  and  it  is  for  the  intere-t  of  the  corporation  and 
of  the  community  that  the  bist  instrument  should  be  employed. 
It  is  no  less  for  the  interest  of  all  that,  if  negotiable  paper  is  to  be 
employed,  its  validity  should  not  be  open  to  objections  which 
would  impair  its  usefulness  by  requiring  at  every  step  an  inquiry 
into  the  authority  by  which  it  is  issued.  There  are  matters  of 
common  knowledge  pertinent  to  the  present  question.  Gaslight 
companies  like  the  defendant  are  chartered  for  the  purpose  of 
making  and  sellin::  gas.  They  are  located  in  every  city  of  the 
commonwealth,  and  in  most  of  the  larger  towns  and  villages.  In 
the  recent  development  of  the  use  of  electricity  many  electric 
light  or  light  and  jjower  companies  have  been  established  where 
gaslight  companies  are  in  operation.  The  i)owers,  obligations,  and 
business  of  tliese  electric  compani«  s  are  so  similar  to  those  of  gas- 
lightcompanies  that  they  are  classed  with  them  in  the  minds  of  bus- 
iness men,  and  are  under  the  supervision  of  the  same  State  board. 
We  see  no  reason  why,  in  respect  to  the  present  question,  all  of 
this  general  diss  or  corporations  shouhl  not  be  governed  b}'  one 
rule.     They  aie  all  in  fact  "  manufacturing  and  trading  corpora- 

117 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

tious  "  in  the  same  sense  that  companies  whose  business  it  is  to 
manufacture  and  sell  cottons,  woolens,  shoes,  or  paper  are  manu- 
facturing and  trading  corporations.  None  of  these  companies 
are  traders  in  the  strict  sense  contended  for  by  the  defendant, 
since  none  of  them  make  it  their  "•  business  to  buy  merchandise 
or  goods  and  sell  the  same."  All  of  them,  and  the  gaslight  com- 
panies equally  with  the  others  named,  buy  merchandise  and  goods 
in  large  amounts,  expend  large  sums  in  transforming  by  their 
processes  of  manufacture  the  articles  purchased  into  other 
commodities  which  they  sell  for  the  purpose  of  making  a 
profit.  Neither  the  fact  that  pipes  which  a  gaslight  com- 
pany uses  only  to  deliver  to  its  customers  one  of  the  commodi- 
ties which  it  sells,  nor  that  its  price  for  that  commodity  may  be 
regulated  by  civil  authority,  nor  that  the  municipality  in  which 
its  plant  is  located  may  purchase  or  take  its  franchise  and  prop- 
erty, makes  it  less  advantageous  or  necessary,  that  the  gaslight 
company  shall  be  able  to  use  its  credit  in  its  commercial  dealings. 
Although  such  companies  manufacture  only  as  they  deliver,  and 
so  have  no  occasion  to  hold  large  quantities  of  manufactured 
goods  for  a  market,  there  are  features  of  their  business  which 
make  it  necessary  for  them  to  have  control  of  large  amounts  of 
money  at  certain  seasons.  Coal,  their  chief  raw  material,  is 
uniformly  at  its  lowest  price  in  the  summer,  and  away  from  the 
seaboard  is  usually  taken  in  in  large  quantities  at  that  season. 
Gas  is  uniformly  sold  upon  time,  and  the  bills  collected  monthly 
or  quarterly.  The  work  of  extending  and  repairing  street  mains 
and  other  work  upon  the  manufacturing  plant  can  be  done  to  the 
best  advantage  during  only  a  portion  of  the  year.  A  business  so 
conducted  affords  abundant  scope  for  the  advantageous  use  of 
the  credit  of  the  corporations  engaged  in  it,  and  they  would 
naturally  be  expected  to  use  their  credit  in  tlie  transaction  of 
their  ordinary  business.  Their  published  returns  made  to  the 
board  of  gas  commissioners  show  that  the  companies  do  in  fact 
issue  large  amounts  of  promissory  notes.  It  is  true  that  these 
notes  may  possibly  have  been  issued  under  special  votes  or  by- 
laws or  other  explicit  authority.  Upon  this  point  we  have  no 
evidence  or  means  of  certain  knowledge.  But  it  is  also  true,  and 
is  a  consideration  entitled  to  weight,  that  the  practice  of  gas- 
lio-Iit  companies  to  issue  promissory  notes  has  grown  up  since  the 
announcement  by  the  court  of  the  rule  that  treasurers  of  manu- 
facturing and  trading  corporations  are  presumed  to  have  authority 
to  issue  such  notes ;  and  again,  that  gasHght  companies  are  in 
fact  manufacturing  and  trading  corporations.  The  strong  infer- 
ence is  that  the  gaslight  companies  and  their  officers,  and  those 
who  have  received  in  payment  or  bought  or  discounted  their 
promissory  notes,  have  in  so  doing  acted  upon  the  assumption 
that  the  rule  as  to  the  implied  authority  of  treasurers  of  manu- 
facturing and  trading  corporations  to  issue  negotiable  paper 
apphed  to  the  treasurers  of  gaslight  companies.  Those  who  have 
occasion  to  deal  directly  with  such  companies,  or  to  purchase  or 

118 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

discount  their  notes  in  the  money  market,  would  naturally  assume 
that  the  rule  so  long  applied  by  the  court  to  other  manufacturing 
and  trading  corporations  would  be  applied  to  these.  In  our 
opinion,  the  same  reasons  which  required  the  making  of  the  rule 
referred  to  are  oi)erative  here,  and  require  us  to  hold  that  it  is  to 
be  applied  in  the  case  of  gaslight  companies.  We  do  not  dis- 
regard the  fact  that  sucii  companies  have  peculiar  duties  to  the 
public,  and  peculiar  privileges,  and  that  their  operations  may  be 
regulated  b}'  public  authority,  and  their  franchises  and  property 
taken  over  by  tlie  municipalities  in  which  their  works  are  located. 
But  the  situation  of  such  a  company  with  reference  to  this  class 
of  rights  and  obHgation^i  is  the  same  irrespective  of  the  question 
whether  its  treasurer  is  or  is  not  to  be  presumed  to  have  power 
by  virtue  of  hisollice  to  issue  promissory  notes.  Such  notes  do 
not  bind  the  franchises  or  the  property  of  the  company  any  more 
than  debts  upon  open  account.  A  majority  of  the  court  is  there- 
fore of  opinion  that  the  jury  was  rightly  instructed  that  the 
treasurer  of  the  defendant  corporation  by  virtue  of  his  office,  had 
authority  to  sign  a  note  which  would  bind  the  corporation. 

4.  It  is  not  necessary  to  consider  in  detail  the  numerous  ques- 
tions argued  by  the  defendant  as  to  the  admission  and  the 
exclusion  of  evidence  and  the  rulings  given  and  refused,  bearing 
upon  the  status  of  Mr.  Ruggles  as  the  treasurer  de  jure  or  de 
facto  of  the  corporation,  or  upon  the  answers  to  the  special 
questions  propounded  by  the  court  and  answered  by  the  jury  in 
addition  to  the  general  verdict  for  the  plaintiff.  Upon  the  uncon- 
trovcrted  evidence,  certain  persons  claiming  to  act  as  the  stock- 
holders of  the  corporation,  all  of  whom  were  interested  in  its 
stock,  assembled  at  its  office  on  the  day  fixed  in  its  by-laws  as 
the  date  of  its  annual  stockholders'  meeting,  and  went  through 
the  forms  of  holding  its  annual  meeting  and  of  electing  him  treas- 
urer of  the  company.  The  former  incumbent  of  the  office  re- 
signed it  into  the  hands  of  Mr.  Ruggles,  and  he  has  since  tilled 
the  position  of  treasurer  under  a  claim  of  a  right  to  the  olHce, 
and  without  dispute  on  the  part  of  any  stockholder  or  member  of 
the  corporation,  and  no  proceedings  have  been  brought  by  the 
corporation  itself  to  test  his  title  to  the  otlice.  The  note  in  suit 
was  issued  when  he  had  thus  been  in  the  unquestioned  discharge 
of  the  functions  of  the  ofhce  for  nearly  three  months,  and  immedi- 
ately thereafter,  at  a  meeting  of  which  public  notice  was  gi\en, 
his  election  was  ratified  and  confirmed.  No  person  in  any  way 
interested  in  the  stock,  either  as  a  stockholder  of  record  or  as  a 
purchaser  or  pledgee  of  untransferred  certificates,  has  contested 
in  any  way  his  riglit  to  the  otUce.  The  contention  that  he  is  not 
the  lawfully  elected  treasurer  has  been  made  onl}'  by  the  corpoia- 
tion  itself,  and  only  as  a  technical  defense  t<;  the  present  suit. 
Wiiatever  might  be  the  rule  to  be  applieil  if  a  stockholder  or 
member  of  llie  corporation  or  the  corporation  itself  had  contested 
the  right  of  Mr.  Ruggles  in  proceedings  brought  to  test  the 
validity  of  his  original  election,  or  of  the  subsequent  ratification, 

119 


ILL.  CAS.  PARTIES   TO   BILLS    AND   NOTES.  [CH.  IV. 

and  without  holding  as  to  the  rules  which  apply  to  de  facto 
officers  of  government  or  of  public  or  quasi-public  corporations, 
we  are  of  opinion  that  under  such  circumstances  the  corporation 
itself  cannot  be  permitted  to  contend  in  defense  of  an  action  like 
the  present  that  the  acts  of  a  person  who,  under  color  of  an  elec- 
tion to  the  office,  has,  without  protest  or  opposition  from  any 
source,  acted  as  its  treasurer  for  so  long  a  time,  are  invalid 
merely  because  the  annual  meeting  at  which  he  was  chosen  was 
not  called  in  accordance  with  the  by-laws.  None  of  the  excep- 
tions relating  to  this  branch  of  the  ease  are,  in  view  of  the  uncon- 
troverted  facts,  material  to  the  question  whether  the  note  in  suit 
is  a  valid  cause  of  action  against  the  corporation,  and  they  are 
overruled  as  immaterial.     Exceptions  overruled. 

Field,  C.  J.  (dissenting).  The  most  important  question  in 
this  case  is  whether  the  instruction  of  the  court  is  correct  that  the 
treasurer  of  such  a  corporation  as  the  defendant  has  authority  to 
sign  a  promissory  note  for  the  corporation  by  virtue  of  his  office, 
although  the  by-laws  confer  no  such  authority  on  him,  and  he  has 
not  been  held  out  by  either  the  stockholders  or  the  directors  of 
the  corporation  as  having  any  such  authority,  and  has  not  been 
knowingly  permitted  to  exercise  any  such  power.  The  ground  on 
which  certain  officers  and  agents  are  held,  as  matter  of  law,  to 
possess  certain  implied  powers  by  virtue  of  the  office  or  employ- 
ment, is  that  by  a  well-known  general  usage  certain  powers 
attach  to  the  office  or  employment,  and  the  appointment  is  pre- 
sumed to  have  been  made  with  reference  to  this  usage,  unless 
there  is  notice  or  knowledge  to  the  contrary.  Tiie  grounds  on 
which  this  court  has  decided  that  the  treasurer  of  a  manufacturing 
and  trading  corporation  must  be  taken  to  have  authority  to  sign 
promissory  notes  in  behalf  of  the  corporation,  unless  there  is 
notice  or  knowledge  to  the  contrary,  are  stated  in  the  opinion  of 
the  majority  of  the  court,  but  these  decisions  have  been  confined 
to  corporations  which  sell  merchandise  in  the  market,  although 
they  manufacture  the  merchandise  which  they  sell,  and  the  doc- 
trine has  never  been  extended  to  such  quasi-public  corporations 
as  gaslight  companies.  In  a  street-railway  corporation,  which 
perhaps  affords  the  nearest  analogy,  an  implied  power  in  the 
treasurer  to  sign  promissory  notes  for  the  corporation  has  been 
denied,  and  treasurers  of  municipal  corporations,  and  of  corpora- 
tions generally,  have  no  such  implied  power.  Gasliglit  companies 
are  not  commonly  known  as  "  trading  companies."  They  do  not 
sell  goods,  wares,  and  merchandise  in  the  market.  Indeed,  they 
are  not  commonly  called  "  manufacturing  companies."  They 
manufacture  and  deliver  gas  to  the  inhabitants  of  defined  locali- 
ties, at  prices  fixed  either  by  public  authority  or  by  the  com- 
panies themselves,  subject  to  public  supervision.  Tliey  may  be 
invested  with  the  right  of  eminent  domain,  and  subjected  to 
municipal  control,  and  the  business  may  be  carried  on  by  towns 
and  cities  as  well  as  by  private  corporations.  Their  property  is 
mainly  in  real  estate.     The  income  is  received  at  regular  times, 

120 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

and,  althougli  small  in  proportion  to  the  value  of  the  plant,  is  not 
subject  to  unforeseen  variations  in  kind  or  amount.  These  com- 
panies may  issue  bonds  at  not  less  than  par,  but,  unless  specially 
authorized  by  the  legislature,  the  amount  of  bonds  must  not 
exceed  the  capiial  ac  tually  paid  in  (St.  1886,  c.  3.')(),  §  3),  and 
the  property  wliicli  coiistiiutes  the  plant  is  or  should  be  paid  for 
by  the  capital  stock  and  the  proceeds  of  the  bonds.  Such  com- 
panits  may  sometimes  have  occasion  to  borrow  money  and  to  give 
promissory  notts,  but,  if  will  conducted,  the  occasions  cannot  be 
frequent.  The  word  "  treasurer,"  in  and  of  itself,  does  not  import 
that  the  person  holding  that  ofHce  is  the  general  business  manager 
of  the  corporation,  but  only  that  he  is  the  person  to  receive,  keep, 
and  disburse  the  money  of  the  corporation.  It  was  not  shown  in 
the  present  case  that  treasurers  of  similar  corporations  customarily 
exercise  the  i)0wer  of  giving  promissory  notes  in  behalf  of  the  cor- 
porations. Such  a  p(nver  may  be  given  by  the  by-laws  to  a 
treasurer,  either  alone  or  jointly  with  some  other  officer  or  officers  ; 
but  in  this  case  the  defendant  offered  to  show  that  by  the  by-laws 
the  treasurer  "  had  no  ]iower  ns  treasurer  to  sign  notes  in  behalf 
of  the  company,"  and  this  evidense  was  excluded.  We  know  of 
no  custom  or  usage  of  which  we  can  judicially  take  notice  that 
treasurers  of  such  corporations  usually  have  such  authority,  or 
usually  exercise  such  a  power.  We  know  of  no  principle  of  pub- 
lic policy  which  requires  us  to  hold  that  the  treasurer  of  such  a 
corporation  has  impliedly  such  a  power,  when  he  in  fact  has  it 
not,  and  has  not  been  held  out  by  the  corporation  or  its  directors 
as  having  it,  and  when  it  does  not  ajjptar  that  treasurers  (f  similar 
corporations  have  customarily  exercised  such  a  power  so  publicly 
and  uniformly  that  courts  cantake  judicial  notice  of  it.  It  is  impor- 
tant that  corporations  should  retain  the  power  of  controllirg  their 
officers.  The  general  i  ulc  is  that  when  one  person  signs  the  name 
of  another  to  any  contract,  whether  the  otiier  be  a  natural  or  arti- 
ficial person,  the  authority  to  do  so  should  be  shown,  unless  the 
principal  has  held  out  such  person  as  having  such  authority.  The 
instances  must  bo  rare  when  the  Lw  will  necessarily  imply  from 
the  name  of  an  office  in  a  corporation  authority  to  sign  the  name 
of  the  corporation  to  any  contract  when  no  such  authority  has  in 
fact  been  given,  or  has  ever  before  bi  en  exercised  with  the  knowl- 
edge of  the  stockholders  or  directors  of  the  coriioration.  There 
is,  generally  speaking,  no  hardship  in  compelling  persons  who 
take  promissory  notes  signed  by  one  person  in  the  name  of  an- 
other to  ascertain  the  authority'  of  tiie  person  signing,  unless  they 
are  content  to  rely  upon  an  indorser  or  guarantor.  I  think  the 
instruction  given  on  this  subject  was  wrong. 
Allen,  J. ,  concurs  in  this  opinion. 

121 


ILL.  CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV 

Form    of    Signature    by   Agent  to  Bind  Corporation  — 
Note  Must  Run  in  Xanie  of  Corporation. 

Casco  Nat.  Bank  v.  Clark,  139  N.  Y.  307  (34  N.  E.  908). 

Appeal  from  supreme  court,  general  term,  second  department. 

Action  b}^  the  Casco  National  Bank  of  Portland  against  John 
Claik  and  E.  H.  Close.  From  a  judgment  of  the  general  term 
(18  N.  Y.  Supp.  887)  affirming  a  judgment  in  favor  of  plaintiff, 
defendants  appeal.     Affirmed. 

Gray,  J.  The  action  is  upon  a  promissory  note,  in  the  fol- 
lowing form,  viz. : — 

Brooklyn,  N.  Y.,  Aug.  2,  1890. 
$7,500.     Three  months  after  date  we  promise  to  pay  to  tlie 
order  of  Clark  &  Chaplin  Ice  Company  seventy-five  hundn^d 
dollars  at  Mecbauics'  Bank  ;  value  received. 

John  Clark,  Prest. 
E.  H.  Close,  Treas. 

It  was  delivered  in  payment  for  ice  sold  by  the  payee  company 
to  the  Ridgewood  Ice  Company  under  a  contract  between  those 
companies,  and  was  discounted  by  the  plaintiff  for  the  payee 
before  its  maturity.  The  appellnnts  Clark  and  Close  appearing 
as  makers  upon  the  note,  the  one  describing  himself  as  "  Prest." 
and  the  other  as  "Treas."  were  made  individually  defendants. 
They  defended  on  the  ground  that  they  had  made  the  note  as 
officers  of  the  Ridgewood  Ice  Compau}'^,  and  did  not  become  per- 
sonally liable  thereby  for  the  debt  represented.  Where  a  nego- 
tiable promissory  note  has  been  given  for  the  payment  of  a  debt 
contracted  by  a  coiporaiion,  and  the  language  of  the  promise 
does  not  disclose  the  corporate  obligation,  and  the  signatures  to 
the  paper  are  in  the  names  of  individuals,  a  holder  taking  bona 
fide  and  without  uwtice  of  the  circumstances  of  its  making  is 
entitled  to  hold  the  note  as  the  personal  undertaking  of  ils 
signers,  notwithstanding  they  affix  to  their  names  the  title  of 
an  office.  Such  an  affix  will  be  regarded  as  descriptive 
of  the  persons,  and  not  of  the  character  of  the  liabilit}'. 
Unless  the  promise  purports  to  be  by  the  corporation,  it  is  that 
of  the  persons  who  subscribe  to  it;  and  the  fact  of  adding  to  their 
names  an  abbreviation  of  some  official  title  has  no  legal  signilica- 
tion  as  qualifying  their  obligation,  and  imposes  no  obligation 
upon  the  corporation  whose  officers  they  may  be.  This  must  be 
regarded  as  the  long  and  well-^eitled  rule.  Byles  Bills,  §§  36, 
37,  71;  Pentz  v.  Stanton,  10  Wend.  271;  Taft  v.  Brewster,  9 
Johns  334;  Hills  v.  Bannister,  8  Cow.  31 ;  Mo^s  v.  Livingston,  4 
N.  Y.  208;  De  Witt  v.  Walton,  9  N.  Y.  571  ;  Bottomley  v.  Fisher, 
1  Hurl.  &  C.  211.  It  is  founded  in  the  general  principle  that  in 
a  contract  every  material  tiling  must  be  definitely  expressed,  and 
not  left  to  conjecture.  Unless  the  language  creates,  or  fairly 
implies,  the  undertaking  of  the  corporation,  if  the  purpose  is 
equivocal,  the  obligation  is  that  of  its  apparent  makers. 
122 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

It  was  said  in  Briggs  v.  Partridge,  64  N.  Y.  357,  363,  that 
persons  taking  negotiable  instruments  are  presumed  to  take  them 
on  tlie  credit  of  the  parties  whose  names  appear  upon  tliem,  and 
a  person  not  a  ))arty  cannot  be  charged  upon  proof  that  the  osten- 
sible party  signed  or  indorsed  as  his  agent.  It  may  be  perfectly 
true,  if  there  is  proof  that  the  holder  of  negotiable  paper  was 
aware,  when  he  received  it,  of  the  facts  and  circumstances  con- 
nected with  its  making,  and  knew  tliat  it  was  intended  ami  deliv- 
ered as  a  corporate  obligation  only,  that  the  persons  signing  it  in 
this  manner  could  U't  be  held  individually  liable.  Such  knowl- 
edge m;giit  be  inii)utable  from  tlie  language  of  the  paper,  in  con- 
nection with  other  circumstances,  as  in  tliec;iseof  Mott  v.  Hicks, 
1  Cow.  513,  where  the  note  nad,  "  the  i)resident  and  directors 
promise  to  pay,"  and  was  subscril)ed  by  t'le  defendant  as  "  pres- 
ident." The  court  held  that  that  was  sufficient  to  distinguish  the 
case  from  Taft  v.  Brewster,  supra,  and  made  it  evident  that  no 
personal  engagement  was  entered  into  or  intended.  Much  stress 
was  p'aced  in  that  case  upon  the  proof  that  the  plaintiff  was 
intimately  acquainted  with  the  Irausaciion  out  of  which  arose  the 
giving  of  the  corporate  oMigation.  In  the  case  of  Bank  of  Gen- 
esee t\  Palchin  liank,  19  N.  Y.  312,  referred  to  by  the  a|>pellants' 
counsel,  liie  act'on  was  against  the  defendant  to  hold  it  as  the 
indorser  of  a  bill  of  exehange  drawn  to  tlie  order  of  "  S.  B. 
Stokis,  Cas,"  an  1  indorsed  in  the  same  words.  The  plaintiff 
bank  was  advised,  at  the  time  of  discounting  the  bill  by  the 
president  of  the  Patchin  Bank,  that  Stokes  was  its  casiiier,  and 
that  he  had  bdn  directed  to  sei.d  it  in  iov  discount,  and  Stokes 
forwarded  it  in  an  official  way  to  the  plaintiff.  It  was  h  Id  that 
t'.e  Patchin  Bank  was  liable,  because  the  agency  of  the  casliier 
in  the  matter  was  communicated  to  the  knowledge  of  the  plaintiff, 
as  well  as  apparent.  Jncidentally  it  was  said  that  the  same  strict- 
ness is  not  required  in  the  execution  of  commercial  pa[)er  as 
between  banks;  tliat  is,  in  other  respects,  between  individuals. 

In  the  al)sence  of  competi  nt  evidence  showing  or  chirging 
knowledge  in  the  holder  of  negotiable  pai)er  as  to  the  char- 
acter of  tlie  obligation,  t'le  established  and  safe  rule  must  be 
regarded  to  be  that  it  is  the  agreement  of  its  o-tensil>le  maker,  and 
not  of  some  oilier  party,  neidier  disclosed  by  the  language  nur  in 
the  manner  of  execution.  Iii  this  case  tliclanguag«>  is  •'  we  prom- 
ise to  jiay,"  and  tliesigntitures  by  the  defendants  Clark  and  Close 
are  perfectly  consilient  with  an  assumption  by  them  of  the  com- 
pany's del)L.  Th'i  appearance  upon  the  margin  of  the  paper  of 
tiie  printed  name  "  Kidgewood  Ice  Company"  was  not  a  fact 
carrying  any  presuinpt  on  that  the  note  was,  or  was  intended  to 
be,  one  by  tiiat  conqiany.  It  was  competent  for  its  ollicers  to 
obligate  themselves  pcr-onally,  for  any  reason  sdisfactory  to 
themselves;  and,  apparently  to  the  world,  tlioy  did  so  by  the 
langnag(>  of  the  note,  wliich  the  mere  use  of  a  blank  form  of  note 
liaving  upon  its  margin  the  name  of  their  company  was  insufficient 
to  n(  gative. 

123 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

In  order  to  obviate  the  effect  of  the  rule  we  have  discussed,  the 
appellants  proved  that  Winslow,  a  director  of  the  payee  company, 
was  also  a  dh-ector  in  the  plaintiff  bank  at  the  time  when  the  note 
was  discounted,  and  it  was  argued  that  the  knowledge  chargeable 
to  him,  as  director  of  the  former  company,  was  imputable  to  the 
plaintiff.  But  that  fact  is  insuffli-ient  to  charge  the  plaintiff  with 
knowledge  of  tlie  character  of  the  obligation.  He  in  no  sense 
re[iresented  or  acted  for  the  bank  in  the  transaction,  and,  what- 
ever his  knowledge  respecting  the  note,  it  will  not  be  im[)utable 
to  the  bank.  Bank  v.  Norton,  1  Hill,  572,  578;  Mayor,  etc.  v. 
Tenth  Nat.  Bank,  HI  N.  Y.  446,  457  ;  18  N.  E,  Rep.  618  ;  Bank 
V.  Payne,  25  Conn.  444.  He  was  but  one  of  the  plaintiff's 
directors,  wlio  could  only  act  as  a  hoard.  Banlcu.  Norton,  supra. 
If  he  knew  the  f  ict  that  these  were  not  individual,  but  corporate, 
notes,  we  cannot  presume  th  it  ho  communicated  that  knowledge 
to  the  board.  An  officer's  knowledge,  derived  as  an  individud, 
and  not  whde  acting  officially  for  the  bank,  cannot  operate  to  the 
prejudice  of  the  latter.  Bank  v.  Davis,  2  Hill,  451.  The  knowl- 
edge with  which  the  bank  as  his  principal  would  be  deemed 
chargeable,  so  as  to  affect  V,  would  be  where,  as  one  of  the  board 
of  directors,  and  participating  in  the  discount  of  the  paper,  he  had 
acted  atfirmalively  or  fraudulently  with  respect  to  it,  as  in  the 
case  of  Bank  v.  Davis,  supra,  by  a  fraudulent  perversion  of  the 
bills  from  the  obj.ct  for  which  drawn,  or  as  in  Holden  v.  Bank, 
72  N.  Y.  286,  where  the  president  of  the  bank,  w^ho  represented 
it  in  all  the  transactions,  was  engaged  in  a  fraudulent  scheme  of 
conversion.  It  was  said  in  the  latter  case  that  the  knowledge  of 
the  president  as  an  individual  or  as  an  executor  was  not  imput- 
able to  the  bank  merely  because  he  was  the  president,  but  because, 
when  it  acted  through  him  as  president,  in  any  transaction  where 
that  knowledge  was  material  and  applical)le,  it  acted  through  an 
agent.  The  rule  may  be  stated,  generally,  to  be  that  where  a 
director  or  an  officer  lias  knowledge  of  material  facts  respecting  a 
proposed  transaction,  which  h;is  relations  to  it,  as  representing 
the  bank,  have  given  him,  then,  as  it  becomes  his  official  duty  to 
communicate  that  knowledge  to  the  bank,  he  will  be  presumed  to 
have  doiie  so,  and  his  knowledge  will  then  be  imputed  to  tbe 
bank  But  no  such  duty  can  be  deemed  to  have  existed  in  tl  is 
case,  where  the  appellants  have  made  and  delivered  a  promissory 
note,  purporting  to  be  their  individual  promise.  If  one  of  the 
plaintiff's  officers  did  have  knowledge  —  whether  individually  or 
as  a  director  of  the  Clark  &  Chaplin  Company  is  not  material  — 
that  the  paper  was  made  ami  intended  as  a  corporate  note,  his 
failure  to  so  state  to  the  bank  could  not  prejudice  it.  It  was  in 
no  sense  incumbent  upon  him,  assuming  that  he  actually  par- 
ticipated in  the  discount  (a  fact  not  shown),  to  explain  that 
the  note  was  the  obligation  of  the  Ridge  wood  Company,  and  not 
of  the  persons  who  appeared  as  its  makers.  He  was  under  no 
duty  to  these  persons  to  explain  their  acts,  and  the  law  would  not 
imply  any.     At  most  it  would  be  merely  a  case  of   knowledge, 

124 


CH.  IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

acquired  by  a  director  of  facts  not  material  to  the  tran- action  of 
discount  ])y  the  plaintiff,  and  which  he  was  under  no  obligation 
to  communicate.  No  other  questions  require  discussion,  and  the 
judgment  rendered  below  should  be  alHrmed,  with  costs.  All 
concur. 


Ambiguous  Execution  of  Corporate  Note  by  Agent. 

Frankland  v.  Johnson,  147  111.  520  (35  N.  E.  480). 

Appeal  from  appellate  court,  first  district. 

Assumpsit  by  L.  M,  Johnson  against  Benjamin  Frankland. 
Plaintiff  obtained  judgment,  which  was  affirmed  by  the  appellate 
court.     Defendant  appeals.     Affirmed. 

Wilkin,  J.  This  was  an  action  in  assumpsit  by  appellee 
v(!rsus  appellant,  commenced  in  the  superior  court  of  Cook 
county  by  attachment.  The  declarntion  consisted  of  the  common 
counts,  and  a  special  count  u|)on  the  following  instrument: 
"$5,592.00.  Chicago,  June  1st,  1885.  On  or  before  the  fiist 
day  of  June,  1888,  the  Western  Seaman's  Friend  Society  agrees 
to  pay  to  L.  M.  Johnson  or  order  the  sum  of  five  thousand  five 
hundred  and  ninety-two  do'lars,  with  interest  at  the  rate  of  six 
per  cent  per  annum.  B.  Frankland,  Gen.  Supt."  The  special 
count  alleges  that  the  defendant,  on,  etc.,  "made  his  certain 
promissory  note  in  wilting,  *  *  *  in  and  by  which  said  note 
the  said  defendant,  by  the  name,  style,  and  description  of  tiie 
'  Western  Seaman's  Friend  Society,'  promised  to  pay  the  said 
defendant,"  etc.  '<  »  *  *  And  that  he,  the  said  defend- 
ant, at  the  same  time  and  place  of  the  execution  of  the  note 
aforesaid,  and  as  part  of  the  same  transaction,  by  a  certain  writ- 
ing upon  the  face  of  said  note,  guarantied  the  prompt  payment  of 
tlie  same,  and  undertook  and  promised  to  pay  to  the  order  of  said 
plaintiff  the  sum  of  money  therein  mentioned,  »  *  *  which 
wiiting  was  in  the  words  and  figures,  to  wit,  '  B.  Frankland,  Gen. 
Supt.'  "  'I'lie  affidavit  for  attachment  alleged  that  the  defendant 
was  a  non  resident  of  the  State,  and  that  upon  diligent  inquiry 
his  ])lace  of  resiiU  nee  could  not  be  ascertained.  An  amended 
affidavit  set  up  other  causes  for  attachment,  but,  in  our  view  of 
the  case,  it  is  uninqiortant.  To  the  declaration,  the  defendant 
filed  a  i)lea  of  nonassumpsit ;  and  to  the  writ  of  attaciuuent,  a 
plea  in  abatement,  traversing  the  allegations  of  the  affidavit.  On 
these  pleas,  issue  was  joined,  and  a  trial  partially  had  before  a 
jury;  but,  before  it  was  concluded,  it  was  agreed  between  the 
parties  that  the  jury  might  be  discharged,  and  the  case  be  sub- 
mit; ed  to  the  (•(  urt,  which  was  done.  Judgment  was  rendered  for 
the  i)laintiff  for  the  amount  of  the  note  sued  on,  and  sustaining 
tie  attachment.  The  defendant  appealed  to  the  a[)pellatc  court, 
and  it  affirmeil  the  judgment  of  the  superior  court. 

As  to  tiie  cause  of  action,  the  question  between  the  parties  is 
wbether  the  instrument  sued  on  is  the  personal  note  of  the  defend- 

125 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CII.   IV. 

ant.  or  tliat  of  the  Western  Seaman's  Friend  Society.  It  is  con- 
tended by  counsel  for  appellee  that,thero  beiiis;  no  plea,  verified  by 
atlidavit,  denying  the  execution  of  the  instrument,  the  defendant 
cannot  question  his  individual  liability  upon  it.  This  position  is 
based  upon  section  34,  c.  1 10,  of  our  statute,  whicli  provides  that 
no  person  bhall  be  pt  rmitted  to  deny  on  trial  the  execution  of  any 
instrument  in  writing  upon  which  any  action  may  have  been 
brought,  unless  the  person  so  denying  the  same  shall,  if  defend- 
ant, verify  his  plea  by  affidavit.  The  defindant  did  not  claim  the 
right  on  the  trial  to  deny  the  execution  of  the  note.  He  admits 
that  fact,  but  deu'es  that,  as  executed,  it  became  his  personal 
obligation.  This  we  Ihink  he  might  d  j  without  a  sworn  plea,  and 
that  seems  to  have  been  the  view  of  tlie  trial  court.  The  defend- 
ant was  permitted  to  introduce  his  own,  and  the  testimony  of 
other  witnesses,  giving  his  version  (if  all  the  facts  and  circum- 
stances under  which  the  uole  was  made,  and  therefore  had  the 
benefit  of  all  the  fads  available  to  him  as  a  defense  under  any 
stale  of  pleading.  The  writing,  on  its  face,  is  not  distinctly  the 
note  of  Frankland.  A  personal  note  by  him,  in  proper  form, 
would  have  used  the  personal  pronoun  "I,"  instead  of  the  name 
of  the  corporation,  and  wou'd  have  been  signed  without  the 
designation  "  Gen.  Supt."  JSVither  is  it,  by  its  terms,  a  note  of 
a  corporation.  As  such,  it  should  have  been  signed  with  the 
name  of  the  corporation,  by  its  president,  secretary,  or  other 
offici  rs  authorized  to  execute  it;  or,  as  iu  Scanlan  v.  Keitli,  102 
111.  634,  by  the  proper  officers,  designating  themselves  officers  of 
the  corporation  for  which  they  assumed  to  act;  or,  as  iu  Bank  v. 
Gillet,  100  111.  254,  using  the  corporate  name  both  in  the  body  of 
the  note  and  in  the  signa'  ures  to  it. 

But  if  it  be  conceded  that,  i)rima  facie,  a  general  superintend- 
ent of  a  corporation  his  authority  to  make  promissory  notes  in 
its  name,  and  this  instrument  held  to  appear  on  its  face  to  be 
the  obligation  of  the  society,  rather  than  of  Frankland,  certainly 
it  could  not  even  then  be  contended  that  it  was  conclusively  so. 
It  is  well  understood  that,  if  the  agent,  either  of  a  corporation  or 
as  an  individual,  makes  a  contract  which  he  has  no  authority  to 
make,  he  binds  himself  personally  according  to  the  terms  of  the 
contract.  Aug.  &  A.  Corp.,  §  303.  It  was  said  by  Suiherland, 
J.,  in  Mott  V.  Hicks,  1  Cow.  513:  "  It  is  perfectly  well  settled 
that  if  a  person  undertake  to  contract  as  agent  for  an  individual 
or  corporation,  and  contracts  in  a  manner  which  is  not  legall}- 
binding  upon  his  principal,  he  is  personally  responsible  [citing 
authorities].  And  tiie  agent,  when  sued  upon  such  a  contract, 
can  exonerate  himself  from  personal  liability  only  by  showing  his 
authority  to  bind  those  for  whom  he  has  undertaken  to  act.  It  is 
not  for  the  i)laintiff  to  show  that  he  has  not  authority.  The 
defendant  must  show  affirmatively  that  he  had."  This  rule  is 
quoted  with  approval  in  AVheeler  v.  Reed,  36  111.  91.  This  action 
is  against  Frankland  individually.  The  note  is  declared  upon  as 
his  personal  promise  to  pay.     The  question,  then,  as  to  whether 

126 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.  CAS. 

it  iS  liis  contract,  or  that  of  the  Western  Seaman's  Friend  Society, 
is  O'  e  '  f  fact,  and  so  it  was  treated  on  the  trial.  Both  parties 
went  fully  into  th  >  facts  and  circumstances  leading  to  and  attend- 
ing the  inakng  of  tlie  noie.  So  far  from  showing  allirmativcly 
that  aiii)ellant  had  authority  to  make  t  e  note,  so  as  to  ])ind  the 
corporation,  the  evidence  surely  tends  to  sh  »w  the  contrary,  and 
that  it  was  the  intention  of  the  i)ariies  that  he  should  be  individ- 
ually responsible.  No  record  i>roceedings  whatever  on  the  part  f)f 
the  corporation,  pertaining  to  appellant's  transactions  with 
appellee  or  her  husband,  were  shown.  It  is  clear  that,  if  suit 
had  been  against  the  society,  there  could  have  been  no  recovery, 
on  the  evidence  in  this  record.  At  all  events,  the  facts  have  been 
settled  adversely  to  appellant,  and  are  not  open  to  review  in  this 
cc'urt. 

The  propositioTis  submitted  to  the  trial  court  by  appellant,  to 
be  held  as  law  ai)plicable  to  tlie  case,  are  mainly  requests  to  hold 
certain  facts  to  have  been  proven,  and  under  the  evidence  they 
were  all  properly  refused.  In  fact,  no  argument  is  made  in  sup- 
port of  them.  There  is  but  one  theory  (n  wiiich  the  judgment 
below  could  be  reversed  by  this  court,  and  that  is  that  the  note 
sued  on  must  be  held  to  be  the  contract  of  the  corporation,  abso- 
lutely and  conclusively,  and  all  parol  proof  tending  to  establish 
appellant's  liability  was  incompetent,  and  that  tiieory  is  clearly 
untenable. 

As  to  the  judgment  on  the  attachment,  it  is  only  necessary  to 
say  that  the  evidence  at  lea^t  tended  to  support  tlie  allegations  of 
the  original  affidavit,  and  the  judgment  of  affirmance  in  the  appel- 
late court  is  conclusive.  The  judgment  of  the  appellate  court 
will  be  affirmed. 


When   Parol    Evidence    is    Admissible    to    Charge    Cor- 
poration   on  Xote. 

Sparks  v.  Despatch  Transfer  Co.,  104  Mo.  531  (15  S.  W.  417). 

Appeal  from  circuit  court,  Jackson  county ;  J.  H.  Slover, 
Judge. 

This  is  an  action  on  five  negotiable  promissory  notes,  alleged 
to  have  been  executed  1)3'  defendant  by  and  through  one  Stewart 
Jackson.  The  plaintiffs  were  copartners  engaged  in  the  horse 
and  mule  business  in  Kansas  City,  and  had  been  for  two  years 
prior  to  the  making  of  the  notes  sued  on.  The  defendant  was  a 
business  corj)oration,  organized  under  the  laws  of  this  State,  ai  d 
doing  transfer  business  in  Kansas  City.  On  the  21st  day  of 
June,  1887,  one  Stewart  Jackson,  in  payment  for  certain 
mules  by  him  bought  of  plaintiffs  that  day,  gave  plain- 
tiffs the  following  n-.te:  "Sl,8r>n.00.  Kansas  City,  Mo.,  June 
21,  1887.  Sixty  da\s  after  date  I  promise  to  pay  to  the  order  of 
Sparks  Bros,  and  Hancock,  eigliteen  hundred  and  sixty  dollars, 
for  value  received,  at  the  liauking  office  of  II.  S.  Mills,  in  Kansas 

127 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

City,  Mo.,  with  interest  from  date  at  the  rate  of  ten  per  cent  per 
annum  until  paid,  and,  if  interest  be  not  paid  annually,  to  become 
as  principal,  and  bear  the  same  rate  of  interest.  Due  Aug.  20, 
1887.  Despatch  Transfer  Co.,  by  S.  Jackson,  president."  And 
on  July  5,  1887,  said  Jackson,  in  i>ayraeut  of  mules  that  day 
bought  of  plaintiff'*,  gave  plaintiffs  the  following  note  :  •'$1,840.00. 
Kansas  City,  Mo.,  July  5,  1887.  Thirty  days  after  date  we 
promise  to  pay  to  the  order  of  Sparks  Bros,  and  Hancock,  eighteen 
hundred  and  forty  dolarc^,  for  value  received,  at  the  banking  office 
of  H.  S.  Mills  &  Son,  in  Kansas  City,  Mo.,  with  interest  from 
date  at  the  rate  of  ten  i)er  cent  per  annum  until  paid,  and,  if  in- 
terest be  not  paid  annually,  to  become  as  principal,  and  bear  the 
same  rate  of  interest.  Due  Aug.  5,  1887.  Despatch  Transfer 
Co.,  by  S.  Jackson,  President.  Indorsed:  Protest  waived.  S. 
Jackson."  On  the  lltli  of  June,  1887,  said  Jackson,  for  mules 
bought  by  him  of  plaintiffs,  gave  them  this  note:  "$300.00. 
Kansas  Citj^  Mo.,  June  11,  1887.  Sixty  days  after  date  I  prom- 
ise to  pay  to  the  order  of  Sparks  Bros,  and  Hancock,  tliree  hun- 
dred dollars,  with  ten  per  cent  interest  from  date,  value  received. 
Due  Aug.  10,  1887.  S.  Jackson."  On  June  lllh  said  Jack- 
son, for  mules  by  h'm  bought  that  day  of  plaintiffs,  gave  this 
note:  "$375.00.  Kansns  City,  Mo.,  June  11,  1887.  Sixty  days 
after  date  I  promise  to  pay  to  the  order  of  Sparks  Bros,  and 
Hancock,  tliree  hundred  and  seventy-hve  dollars,  with  ten  per 
cent  interest  from  date,  value  received.  S.  Jackson."  And  on 
June  15th  this  note:  "  $240.  Kansas  City,  Mo.,  June  15,  1887. 
Sixty  days  after  date  I  promise  to  pay  to  the  order  of  Sparks 
Bros,  and  Hancock,  two  hundred  and  forty  dollars,  for  one 
mouse-colored  mule,  bought  of  C.  Sparks,  with  ten  per  cent  in- 
terest from  date,  value  received.  Due  Aug.  14,  1887.  S.  Jack- 
son." The  plaintiffs  declare  upon  each  note  separately,  and 
charge  that  the  defendant  executed  all  five  of  the  notes,  by  its 
president,  Stewart  Jackson.  There  is  also  a  sixth  count,  which 
is  as  follows:  "  (6)  Plaintiffs,  for  another  cause  of  action,  state 
that  between  the  10th  day  of  June,  1887,  and  the  16th  day  of 
June,  1887,  plaintiffs,  at  the  request  of  the  defendant,  sold  and 
delivered  to  the  defendant  certain  mules  as  follows,  to  wit:  On 
the  11th  day  of  June  three  (3)  mules,  for  $675  00;  on  the  15th 
day  of  June,  1887,  one  (  1 )  mule  for  $240.00  ;  amounting  in  all  to 
the  sum  of  $915.00;  which  said  sum  defendant  owes  plaintiffs, 
and  fails  and  refuses  to  pay  the  same,  although  payment  lias  been 
demanded  ;  wherefore  plaintiffs  demand  payment  against  defend- 
ant for  the  sum  of  $915.00  and  for  costs." 

The  defendant,  for  its  defense,  denies  that  it  executed  either 
of  said  notes ;  denies  that  it  ever  authorized  the  execution  of 
either  of  said  notes  ;  alleges  that  said  notes  were  given  to  plain- 
tiffs by  said  Jackson  on  his  own  private  account,  and  that  the 
consideration  therefor  was  certain  mules  and  horses  sold  by  plain- 
tiff to  Jackson  fur  his  individual  account,  and  in  no  way  con- 
nected with  defendant's  business;   that  said  mules  and   horses 

128 


CH.  IV.]  PARTIES   TO    BILLS    AND    NOTES.  ILL.  CAS. 

were  never  delivered  to  defendant,  and  were  never  bought  by  or 
for  defendant ;  that  Jackson  was  carrying  on  a  general  business, 
buying  and  selling  horses  and  mules  for  his  own  account,  which 
plaintiffs  well  knew;  and  tbat  the  horses  and  mules  for  which 
tluse  notes  were  given  were  bougiit  by  said  Jackson  in  tbe  ordi- 
nary course  of  his  business,  and  plaintiffs  knew  he  did  not  buy 
said  mules  and  horses  for  defendant.  Defendant  set  up  its  char- 
ter, showing  that  by  it  it  was  only  authorized  to  conduct  a  gen- 
eral transfer  business  in  the  city  of  Kansas,  moving  freight  from 
point  to  point  in  said  city  ;  that  it  was  never  engaged  in  the  busi- 
ness of  buying  or  selling  horses  or  mules,  nor  authorized  any  one 
to  do  so  for  it;  that  said  two  notes  were  wrongfully  executed  in 
its  name  by  Jackson  ;  tliat  it  had  no  power  to  engage  in  the  horse 
and  mule  business,  antl  the  notes  and  the  trades  for  said  mules 
were  ultra  vires.  Also  pleaded  especially  that  by  one  of  its  by- 
laws it  was  provided  :  "  No  debt  for  a  sum  larger  than  five  hun- 
dred dollars  shall  be  contracted  in  behalf  of  the  company  by  any 
officer  thereof,  without  a  vote  of  the  board  of  directors  authoriz- 
ing same."  That  tiie  debt  sued  for  in  the  first  and  second  and 
sixth  counts  exceeded  five  hundred  dollars.  That  s:iid  mules 
were  not  bought  for  defendant  by  said  Jackson  in  the  usual  rou- 
tine of  business  :  that  they  Avere  not  needed  by  defendant  for  its 
business  ;  that  tbey  were  not  di  sired  ;  that  defendant  knew  noth- 
ing of  their  purchase,  and  iis  bnard  of  directors  never  authorized 
their  purchase,  nor  the  contracting  of  the  debt  therefor.  This 
answer  was  verified  by  Harry  E.  Overstreet,  secretary  and  treas- 
urer. The  reply  was  a  general  denial.  The  cause  was  tried  by  a 
jury,  and  resulted  in  favor  of  plaintiffs  on  each  count  except  the 
sixth. 

Tlie  facts  developed  by  tbe  evidence  are  as  follows :  The  de- 
fendant was  a  corporation  engaged  in  the  transfer  business  in 
Kansas  City.  Stewart  Jackson  was  the  president  of  the  company. 
The  company,  as  originally  organized,  had  a  capital  of  SI 0,000, — 
100  shares.  Jacksou  had  tbe  controlling  inierest, —  55  shares. 
Afierwards  tbe  stock  was  increased  to  $30,000,  of  which  Jackson 
had  160  shares, —  a  majority  of  all  the  stock.  Jackson  was  the 
president  from  the  beginning  until  he  left,  in  August,  1887,  after 
the  execution  of  the  notes  sued  on.  It  also  appears  that  Jackson 
purchased  every  mule  and  horse  that  defendant  ever  owned  until 
he  absconded;  that  defendant's  busines^s  re<iuired  mules  to  haul 
the  freight  it  handled  ;  that,  beginning  with  Ncneniber,  1885,  and 
ending  May  13,  1887,  defendants  had  some  13  different  transac- 
tions in  mules  with  plaintiffs  or  tbe  firm  which  plaintiffs  succeeded, 
aggregating  some  $3,000  ;  that  in  a  number  of  these  transactions 
the  defendant  gave  its  note  in  its  name,  by  Jackson,  who  con- 
ducted all  the  tra<les.  There  was  also  evidence  that  the  mules 
were  ail  turned  over  to  defendant's  barns.  Defendant  offered 
evidence  that  it  did  not  get  tlie  mules  ;  that,  altbougli  brought 
to  its  barns,  tbey  were  taken  out  by  Jackson,  and  shipped  to  St. 
LOuis ;  that  Jackson  bought  tbe  mules  on  his  own  account,  and 

9  12'j 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.  1\  . 

that  plaintiffs  knew  it.  Plaintiffs  off-  red  evidence  that  they 
thought  and  were  informed  that  the  mules  were  bought  by  Jack- 
son for  the  defendant ;  that  when  Jackson  gave  the  three  notes 
sued'on  in  counts  3,  4,  and  5,  they  directed  him  to  give  the  com- 
pany's notes  to  the  clerk  of  plaintiffs  in  their  counting-room,  and 
did  not  know,  till  after  Jack'-on  had  absconded,  the  notes  simply 
bore  his  name ;  that  they  were  selling  the  stock  to  defendant. 
On  the  trial  defendant  objected  to  the  introduction  of  the  three 
notes  sued  on  in  the  third,  fourth,  and  fifth  counts,  for  the  reason 
that  they  were  incompetent,  irrelevant,  and  immaterial,  as  they 
were  the  individual  notes  of  S.  Jackson  alone ;  that  defendant 
was  not  and  could  not  be  bound  thereby.  The  court  gave  nine 
instructions  for  tiie  plaintiff,  in  which  the  liability  of  defendant 
for  the  acts  of  Stewart  Jackson,  done  in  its  name,  was  correctly 
defined.  The  eighth  instruction  is  as  follows:  "  (8)  As  to  those 
notes  here  sued  on,  executed  in  the  name  of  S.  Jackson,  the  jury 
will  aseertain  whether  these  were  executed  for  and  in  behalf  of 
the  company ;  and  if  you  find  that  they  were  so  executed,  then 
as  totliosethe  defendant  is  liable  thereon  to  the  same  extent  as  if 
said  notes  had  been  executed  in  the  name  of  the  company."  For 
the  defendant  the  court  gave  22  instructions,  fully  submitting  all 
the  is'^ues  tendered  in  its  answer,  that  the  mules  were  purchased 
by  Jackson  on  his  individual  account,  that  plaintiffs  knevv  it,  and 
whether  the  purchasers  were  ultra  vires.  The  court  refused  the 
twenty-third  in-truction,  which  is  as  follows:  "(23)  The  jury 
are  further  instructed  that,  even  if  they  should  beheve  from  the 
evidence  that  at  the  time  of  the  execution  of  the  notes  in  contro- 
versy, and  signed  in  the  name  of  the  defetidant  company,  plain- 
tiffs in  good  faith  believed  that  they  were  dealing  with  defendant's 
company,  and  yet,  while  the  mules,  which  in  return  for  said  notes 
were  delivered  to  S.  Jackson,  remained  in  his  possession,  and 
plaintiffs  knew  of  their  whereabouts  before  disposed  of  by  said 
Jackson,  plaintiffs  or  their  authorized  representatives  became 
aware  or  had  reason  to  know  that  said  Jackson  deceived  them, 
and  misrepresented  to  them  that  said  mules  were  for  defend- 
ant compau}',  and,  notwithstanding  such  knowledge,  made  no 
effort  to  recover  their  said  mules,  but  suffered  said  Jackson  to 
proceed  and  dispose  of  the  same,  then  they  cannot  recover  fi'om 
defendant  ctunpan}' ;  and  in  determining  these  questions  the  jury 
should  determine  from  the  evidence  whether  said  mules  were 
shipped  b}'  said  S.  Jackson  to  St.  Louis,  and  whether  Charlie 
Sparks  was  the  authorized  representative  of  plaintiffs,  and 
whether  he  was  present  at  the  time  of  said  shipment,  or  knew  of 
the  same  in  time  to  have  notified  plaintiffs  and  effected  a  recovery 
of  the  mules  before  they  were  finally  disposed  of  by  said  Jackson, 
if  vou  believe  he  did  d'spose  of  them."  The  jury  returned  the 
following  verdict:  "  We,  the  jur\',  find  for  the  plaintiffs  on  the 
first  five  counts  of  the  petition  as  follows:  First  count,  principal 
and  interest,  $1,937.50;  second  count,  principal  and  interest, 
$1,909.49;  third  count,  principal  and  interest,  $313.33^;  fourth 

130 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

count,  principal  and  interest,  $391,602  ;  fifth  count,  principal  and 
interest,  S250.40.  We  als  >  find  for  defendant  on  the  sixth  count 
of  the  petition.     John  J.  Granefield,  Foreman." 

Gantt,  J.  (after  stating  the  facts  as  above).  The  notes  sued  on 
in  this  case  were  all  executed  by  Stewart  Jackson,  who  was  at  the 
time  of  their  execution  the  president  of  the  defendant  below, 
appellant  here.  The  first  two  were  signed  in  the  name  of  the 
Despatch  Transfer  Company,  by  Jackson  as  president ;  the  othi-r 
three  by  Jackson,  without  any  reference  to  the  corporation,  or 
au}'  words  indicating  that  he  intended  to  bind  an}'  one  but  him- 
self.  The  appellant  seeks  to  avoid  liability  for  any  of  these  notes, 
but  its  defense  differs,  as  to  the  first  two,  from  its  defense  to  the 
remaining  three.  Counsel  for  appellant  argues  that  the  evidence 
did  not  justify  the  instructions  given  for  respondents,  bj^  which 
appellant  was  held  liable  on  the  two  notes  signed  with  the  corpo- 
rate name.  Those  instructions,  in  substance,  declared  the  law  to 
be  that,  if  the  jury  should  find  that  Jackson  was  the  president  of 
the  defendant,  and  that  dtfeiidant  allowed  him  to  act  as  their 
purchasing  agent  in  buying  stock  in  the  name  of  the  compau}', 
and  recognized  his  act  as  such  by  paying  his  orders  given  on  the 
company,  or  by  paying  his  notes  given  bj'  him  for  stock  so  pur- 
chased li_y  iiim  of  i)laintiffs,  then  defendant  was  bound  by  his  acts 
in  purchasing  the  mules  of  plaintiff,  and  for  the  notes  sued  on  in 
the  first  two  counts,  unless  plaintiffs  knew  or  had  reasonable 
means  of  knowing  that  Jackson  was  buying  these  mules  on  his  in- 
dividual account.  The  power  of  Jackson  to  bind  the  defendant  is 
governed  by  the  law  of  agency.  The  princij^le  underlying  is  the 
same  whether  tlie  principal  be  a  corporation  or  an  individual.  It 
is  now  well  settled  that  when  in  the  usual  course  of  the  business 
of  a  corporation  an  officer  has  been  allowed  to  manage  its  affairs, 
his  authority  to  represent  the  corporation  may  be  implied  from 
the  manner  in  which  he  lias  been  permitted  by  tlie  directors  to 
transact  its  business.  This  is  only  the  application  of  the  principle 
that  usual  employment  is  evidence  of  the  powers  of  an  agent,  and 
the  principal  is  held  responsible  for  the  acts  of  his  agent  within 
the  apparent  authority  conferred  on  the  agent.  First  Nat.  Bank 
V.  North  Missouri  &c.  Co.,  8G  Mo.  125;  Washington  Mut.  Fire 
Ins.  Co.  V.  St.  Marv's  Seminarv,  52  Mo.  480 ;  Kilev  v.  Frosee,  67 
Mo.  390;  Martin  v.  Webb,  110  U.  S.  7 ;  3  Sup.  Ct.  Rep.  428; 
Mining  Co.  v.  Anglo-Californian  Bank,  104  U.  S.  192.  The  pres- 
ident of  a  business  cor|)oration  is  its  chief  executive  officer.  He 
may,  without  any  special  authority  from  the  board  of  directors, 
perform  all  acts  of  an  ordinary  nature,  which  by  usage  or  necessity 
are  incident  to  his  otlue,  and  may  bind  the  corporation  by  con- 
tracts in  matters  arising  in  tlie  usuul  course  of  business.  Boone 
Corp.,  §  144  ;  Stokes  v.  Pottery  Co.,  4(3  N.  J.  Law,  237.  In  the 
case  at  bar  Stewart  Jackson  was  i)resident  of  defendant.  He 
purchased  every  mule  that  defendant  owned  from  its  organiza- 
tion until  after  the  execution  of  the  notes  sued  on  in  this  case. 
He  had  repeatedly  signed  notes  in  the  name  of  the  corporation, 

131 


ILL.  CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

and  the  corporation  liad  honored  bis  orders  and  paid  his  notes 
so  drawn.  Plaintiffs  had  13  different  transactions  with  him  as 
the  president  and  |)nrcha3ing  a^ent  of  defendant  prior  to  the  giv- 
ing of  the  n  )tes  heroin,  and  his  acts  had  always  been  ratified. 
The  defendant  was  engaged  in  a  transfer  business  in  which  the 
motive  power  was  mules,  and  it  was  its  written  charter  privileged 
to  buy  mules,  and  execute  its  notes  therefor.  Jackson  had  pur- 
chased mules  for  defendant  of  the  plaintiffs  ;  and  on  this  occasion 
he  informed  them  th  it  he  was  purchising  the  mules  for  which 
these  two  notes  were  given,  for  the  defen-lant.  His  transaction, 
under  the  evidence,  was  wiih^n  both  his  actual  and  apparent 
authority  to  bind  the  defendant.  The  evidence  is  amply  suffi- 
cient to  bind  defendant  on  these  two  notes;  and  there  was  no 
error  in  the  in-truetions  given  for  plaintiffs  on  these  two  notes, 
and  certainly  defendant  ought  not  to  be  heard  to  complain. 

The  action  of  the  court  in  admit  ing  parol  evidence  to  show 
that  the  defendant  was  liable  on  the  tljri  e  notes  sued  on  in  third, 
fourth,  and  fifth  counts,  notwithstanding  its  name  nowhere 
appeared  on  the  notes,  and  in  instructing  the  jury  as  it  did  in  the 
eigh  h  instruction  f()r  the  plaintiffs,  presents  for  our  consideration 
a  question  of  great  practical  importance,  and  much  depends  upon 
its  right  decision.  The  exact  question  here  presented  has  not 
been  passed  on  by  this  court  in  any  case  that  we  have  been  able 
to  find,  but  it  has  been  long  settled  in  many  of  our  sister  States. 
In  Massachusetts  as  early  as  1814,  in  the  ca*e  of  Stackp.le -y. 
Arnold,  11  Mass.  27,  it  was  held  that,  "  where  one  makes  a  writ- 
ten contract,  intending  to  act  therein  as  the  agent  of  another, 
and  to  bind  his  principal,  it  is  necessary  that  it  should  appear 
in  the  contract  itself  that  he  acts  as  such  agent;"  and  oral  testi- 
mony was  held  inadmissible  to  contradict,  vary,  or  materially 
affect  the  written  contract.  The  same  question  came  before  tlie 
same  court  again  in  I860,  in  Brown  v.  Parker,  7  Allen,  337.  In 
that  case  one  N.  H.  Streeter  had  signed  two  negotiable  notes,  and 
it  was  sought  to  hold  defendant  Parker,  on  tlie  ground  that 
Streeter  was  his  agent,  and  intended  to  bind  defendant.  The 
court  says:  "  But  in  suits  on  promissory  notes  or  bills  of 
exchange  no  evidence  is  admis'^ible  to  charge  any  person  as  prin- 
cipal whose  name  is  not  in  some  way  disclosed  on  the  face  of  the 
note  or  draft.  This  point  has  been  often  drcided  in  this  com- 
monwealth, and  the  reasons  on  which  the  rule  rests  have  been 
fully  stated  in  very  recent  decisions;  "  citing  Slawson  t).  Loor- 
ing,  5  Allen,  340,  and  cases  cited,  it  which  it  was  said  by  Chief 
Justice  Bigelow:  "Being  negotiable  paper,  all  evidence  c7e/i07*s 
the  drafts  is  to  be  excluded.  It  is  wholly  immaterial,  therefore, 
that  the  defendant  was  in  fact  the  agent  of  the  com|)any  named 
on  the  face  of  the  drafts ;  that  the  plaintiff  knew  that  he  was  so, 
and  that  the  defendant  had  no  personal  interest  in  the  company." 
In  New  York,  in  Pentz  v.  Stanton,  10  Wend.  271,  the  cases  both 
in  England  and  in  the  different  States  of  the  Union  were  reviewed, 
and  the  conclusion  reached  "  that  no  person  can  be  considered  a 

132 


CH.  IV.]  PARTIES   TO    BILLS    AND    NOTES.  ILL.  CAS. 

party  to  a  bill  unless  his  name  or  the  name  of  the  firm  of  which 
he  is  a  partner  appear  on  some  part  of  it ;  "  citing  Chit.  Bills,  22  ; 
Fenn  v.  Harrison,  3  Terra  R.  761;  Eraly  v.  Lye,  15  East,  7. 
And  this  rule  is  universally  accepted  as  the  law  by  the  recent 
text-writers  on  commercial  paper.  Tied.  Com.  Paper,  §  87 ; 
Rand.  Com.  Paper,  §  131.  "  The  reason  of  this  rule  is  that  each 
party  who  takes  a  negotiable  instrument  makes  his  contracts  with 
the  parties  who  appear  on  its  face  to  be  bound  for  its  payment. 
It  is  'a  courier  without  baggage,' whose  countenance  is  its  pass- 
port; and  in  suits  upon  negotiable  instruments  no  evidence  is 
admissible  to  charge  any  person  as  a  principal  thereto  unless  his 
name  in  some  way  is  disclosed  upon  the  instrument  itself."  1 
Daniel  Neg.  Inst.,  §  303  ;  Mochera  Ag.,  pp.  285-287  ;  Heaton  v. 
Myers,  4  Colo.  55.  And  another  good  reason  for  the  rule  is  that 
every  part  of  commercial  paper  must  be  definite  and  certain  and 
contained  in  the  body  of  the  paper  itself,  so  that  every  taker  and 
holder  understands  exactly  what  his  rights  in  and  to  it  are,  and 
with  whom  he  is  contracting.  Counsel  for  respondents  claim  that 
this  doctrine  has  been  repudiated  by  this  court  in  a  number  of 
decisions,  and  the  importance  of  the  question,  and  the  earnestness 
with  which  this  is  urged,  demand  that  we  should  state  our  reasons 
for  declining  to  take  that  view  of  the  case.  The  leading  case 
relied  upon  by  respondents  is  Washington  &c.,  Ins.  Co.  v.  St. 
Mary's  Seminary,  52  Mo.  480.  The  note  which  was  the  basis  of 
the  action  in  that  case  was  as  follows :  "  S750.  For  value  received 
in  policy  No.  2,969,  dated  the  fourteenth  dayof  March,  1866,  is- 
sued by  the  Washinizton  Mutual  Fire  Insurance  Company  of  St. 
Louis,  I  promise  to  pay  said  company  (or  their  secretary  for  the 
time  being)  the  sum  of  seven  hundred  and  fifty  dollars,  in  such 
portions  and  at  such  time  or  times  as  the  directors  of  said  com- 
pany may  agreeably  to  their  acts  of  incori)oration  require.  Daniel 
McCarthy,  Prest.  Per  Thomas  Burke."  This  court  held  that  it 
was  competent  to  explain  the  ambiguity  on  the  face  of  the  note 
itself.  Speaking  for  the  court.  Judge  Sherwood  said  in  that  case : 
'*  In  the  present  case  the  note  sued  on  is  signed  '  Daniel  McCarthy, 
Prest.'  But  president  of  what?  Just  here,  under  the  rules  laid 
down  in  the  above  cnses,  parol  evidence  steps  in,  and  affords  a 
ready  and  satisfactory  explanation.  The  word  '  Prest.,'  attached 
to  the  name  of  Daniel  McCarthy,  is  an  ear-mark  of  the  oflicial 
capacity  in  which  the  note  was  signed, —  not  evidence,  it  is  true, 
that  the  note  was  signed  in  that  capacity,  but  a  sufficient  basis  for 
the  introduction,  of  testimony  tending  to  establish  that  fact." 
Moreover,  in  that  case  the  note  on  its  face  referred  to  policy  No. 
2,969,  which  insured  the  seminary  building  and  church  building 
belonging  to  St.  Mary's  Seminary.  It  will  be  observed,  first, 
that  the  above  note  is  not  negotiable,  and,  secondly,  that  the 
ambiguity  appears  on  its  face,  growing  out  of  the  word  "  Prest.," 
afiSxed  to  McCarthy's  name.  In  tlie  case  at  bar  the  notes  are  by 
their  terms  negotiable,  and  contain  nothing  but  Jackson's  name 
as  maker ;  so  that  this  case  is  not  authority,  because  the  facts 

133 


ILL.   CAS.  PARTIES    TO    BILLS    AND   NOTES.  [CH.   IV. 

are  entirely  different.  It  is  true,  however,  that  in  this  case  Judge 
Sherwood  quotes  from  the  decision  in  Mechanics'  Bank  of  Alex- 
andria V.  Bank  of  Columbia,  5  Wheat.  327,  in  which  the  supreme 
court  of  the  United  States  says :  "  It  is  by  no  means  true,  as  was 
contended  in  argument,  that  the  acts  of  agents  derive  their  validity 
from  professing  on  the  face  of  them  to  have  been  done  in  the 
exercise  of  their  agency."  If  this  were  all,  it  must  be  conceded 
that  respondents  are  justified  in  claiming  that  this  decision  is 
broad  enough  to  permit  parol  evidence  in  any  case  to  explain  who 
was  the  principal,  notwithstanding  there  is  no  intimation  on  the 
face  of  the  paper  that  any  one  but  the  agent  is  a  party  to  it.  But 
the  supreme  court  of  the  United  States  did  not  put  their  decision 
on  that  ground ;  but,  on  the  contrary,  Justice  Jolinson,  who  de- 
livered the  opinion,  expi-essly  says:  "But  the  fact  that  this 
appeared  on  its  face  to  be  a  private  check  is  by  no  means  to  be 
conceded;  on  the  contrary,  the  appearance  of  the  corporate  name 
of  the  institution  on  the  face  of  the  paper  at  once  leads  to  the 
belief  that  it  is  a  corporate,  and  not  an  individual,  transaction  ;  to 
which  must  be  added  that  the  cashier  is  tlie  drawer,  and  the  teller 
the  payee,  and  the  form  of  ordinary  checks  deviated  from  by  the 
substitution  of  '  t9  order  '  for  '  to  bearer.'  The  evidence,  there- 
fore, on  the  face  of  the  bill  predominates  in  favor  of  its  being  a 
bank  transaction.  But  it  is  enough  for  the  purposes  of  the  defend- 
ant to  establish  that  there  existed  on  the  face  of  the  paper  circum- 
stances from  which  it  might  reasonably  be  inferred  that  it  was 
either  one  or  the  other,  and  in  such  a  case  to  resort  to  extrinsic 
evidence  to  remove  the  doubt."  So  that  it  seems  clear  that  the 
supreme  court  placed  its  decision  upon  the  fact  that  upon  the  face 
of  the  paper  the  ambiguity  appeared.  That  court  would  never 
have  held  that  there  was  any  ambiguity  on  the  face  of  the  notes 
sued  on  in  the  third,  fourth  and  fifth  counts  in  the  case  at  bar. 
Falk-y.  Moebs,  127  U.  S.  697;  8  Sup.  Ct.  Rep.  1319. 

In  Smith  v.  Alexander,  31  Mo.  193,  the  action  was  on  the  fol- 
lowing note  :  "  $500.  St.  Louis,  Mo.,  July  22,  1855.  Ninety  days 
after  date  I  promise  to  pay  to  the  order  of  Messrs.  Smith  &  Co., 
five  hundred  dollars,  for  value  received,  negotiable  and  payable 
without  defalcation  or  discount.  J.  H.  Alexander,  Treasr.,Ohio 
«&  Miss.  R.  R.  Co."  In  that  case  Alexander,  having  been  sued 
on  his  note,  was  allowed  to  show  tliat  he  was  treasurer  of  the 
said  railroad,  and  tliat  he  gave  the  note  simply  as  agent  of  said 
company.  Judge  Ewing  saying :  "A  mere  addition  to  the  name  of 
the  party  signing  the  contract  cannot  be  regarded  as  a  certain 
indicium  that  it  was  made  on  behalf  of  another.  Where,  how- 
ever, it  is  doubtful  from  the  face  of  the  contract  whether  it  was 
intended  to  operate  as  a  personal  engagement  of  the  party  signing 
it  or  to  impose  an  obligation  on  some  third  person  as  principal, 
evidence  is  admissible  to  show  the  character  of  the  transaction." 
So  we  see  that  Judge  Ewing  places  his  ruling  on  the  doubt  appear- 
ing on  the  face  of  the  note,  whether  it  was  the  obligation  of 
Alexander  or  the  railroad  company.     Shuetze  v.  Bailey,  40  Mo. 

134 


CII.   IV.]  PARTIES    TO    BILLS    AND    NOTK^.  ILL.   CAS. 

69,  was  an  action  on  a  contract  for  half  the  vakie  of  a  partition 
wall.  It  was  not  a  negotiable  instrument  at  all,  and  in  that  case 
the  contract  was  signed,  "  Kenneth  McKenzie,  Agent  for  Volney 
Stevenson,  on  the  first  part,"  so  that  case  is  not  similar  in  any 
legal  feature  to  the  one  at  bar.  In  Musser  v.  Johnson,  42  Mo. 
7t,  action  was  brought  on  a  written  assignment  of  a  certain  cl  lim 
against  Johnson  and  others  by  Isaac  H.  Sturgion,  president  North 
Missouri  Railroad  Company,  "  attested  with  the  seal  of  the  com- 
pany, and  couutersigued  by  George  H.  Blood,  Sec'ry  N.  M.  R. 
R.  Co."  It  was  held  to  be  the  act  of  the  company.  Tlie  instru- 
ment was  not  negotiable,  and  the  paper  on  its  face  clearly  showed 
it  was  the  intention  to  assign  the  railroad  coniiiany's  right.  The 
next  case  we  are  cited  to  is  Ferris  c.  Thaw,  72  Mo.  446.  In  that 
case  the  note  or  instrument  read:  "  84,000,  St.  Louis,  Mo.,  Oct. 
3d,  1870.  Twelve  monihs  after  date  I  promise  to  pay  to  the 
order  of  John  W.  Luke,  treasurer,  $4,000.  without  defalcation  or 
discount,  for  value  received,  negotiable  and  paj'able  at  the  Third 
National  Bank  of  St.  Lou's,  with  ten  per  ct  nt  interest  from  date, 
paj-able  semi-annually.  Charlie  Tliaw,  W.  M.  Polar  Star  Lodge 
No.  79.  Indorsed:  John  W.  Luke,  Treasurer."  In  that  case 
ihe  defendants  were  sued  as  members  of  Polar  Star  Lodg.^  No. 
79  of  Ancient  Pree  and  Accepted  Masons.  Defendant  Thaw 
was  its  chief  officer,  with  the  title  of  worshipful  master.  In  that 
case  it  was  shown  that  the  lo'lge  was  an  unincorporated  body; 
that  it  had  borrowed  this  $4,000  for  lodge  purposes.  The  loan 
was  reported  to  tlie  lodge  and  was  approved  at  its  meeting,  all 
the  defendants  voting  therefor.  It  will  be  oliserved  that  in  this 
case  the  ambiguity  apj^ears  on  the  face  of  the  paper,  and  the 
court  properly  pirmitted  evidence  to  show  who  were  the  real 
principals,  and  the  members  of  the  lodge  which  received  the 
money  were  held  on  it.  It  is  true  the  learned  judge  quotes  from 
Story  on  Agency  and  uses  language  that  might  be  construed  to 
include  any  undisclosed  priuci[)al ;  but  it  is  not  praciicalile  in 
every  case  to  go  over  the  entire  law,  and  point  out  all  the 
qu'.difications  that  might  be  mentioned,  and  when  the  law,  as 
quoted,  applies  to  the  controlling  facts  in  the  case,  it  must 
be  understood  as  referring  to  those  facts.  It  is  clear  to  us 
that  the  learned  judge  who  dihvered  that  opinion  had  no 
intention  of  discussing  the  proposition  now  under  considera- 
tion. The  case  was  phiced  upon  the  ground  that,  the  lodge 
having  failed  to  becoiie  a  corpor.tion,  its  members  were 
liable  as  copartners ;  and  they  were  all  shown  to  have  ratified  the 
act  of  the  worshipful  master,  and  his  agency  appeared  on  the 
paper  itse'f,  so  liiat  it  was  unnecessary  to  discuss  the  question 
as  to  the  liability  of  a  person  on  an  instrument  to  which  he  was 
not  a  party.  Martin  v.  Fewe.l,  79  Mo.  401  ;  Richardson  v.  Pitts, 
71  Mo.  128.  It  remains  only  to  notice  Pranklia  Ave.  Ger.  Sav. 
Inst.  V.  Board  of  Kducation,  75  Mo.  408.  That  was  an  action  on 
school  bond,  as  follows:  '*  It  is  hen  by  certified  that  the  special 
school  district  of  the  town  of  Roscoe,  county  of  St.  Clair,  State 

135 


ILL.  CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.  IV. 

of  Missouri,  is  indebted  to ,  or  bearer,  in  the  sura  of  $500, 

payable  *  *  *  xhis  bond  is  issued  under  and  by  virtue  of 
an  act  of  ttie  legislature  of  Missouri  entitled  '  An  act  to  authorize 
cities,  towns,  and  villages  to  organize  for  schools  with  special 
privileges.'  Jas.  Smanger,  Prest.  Henry  Swann,  Secretary." 
Of  course,  on  the  face  of  this  bond,  it  was  the  bond  of  the  school- 
district,  and  no  such  question  as  the  one  at  bar  was  before  the 
court.  In  Snider  v.  Express  Co.,  77  Mo.  525,  Snider  was  the 
consignor  of  the  lost  package,  and  this  court  held  that,  although 
the  package  was  the  property  of  his  sister  Louisa,  Snider  was  the 
trustee  of  an  express  trust,  and  authorized  to  sue.  No  question 
of  negotiable  paper  was  involved  in  the  case,  so  that  it  will 
appear  from  an  examination  of  each  of  the  cases  relied  on  by 
respondents  as  sustaining  the  action  of  the  court  in  admitting 
parol  evidence  to  show  that  Jackson  was  in  fact  the  president  and 
purchasing  agent  of  appellant,  and  executed  the  three  notes 
described  in  third,  fourth,  and  fifth  counts  in  behalf  of  said  com- 
pany, that  they  are  all  unlike  this  case,  in  that  in  each  of  them 
there  was  some  addition,  such  as  "  president,"  "  worshipful 
master,"  "  treasurer,"  or  some  title  designating  an  agency  on 
the  face  of  the  paper  itself,  and  in  such  cases  the  law  permits  the 
ambiguity  to  be  explained ;  and,  indeed,  in  all  other  contracts 
except  bills  of  exchange  and  negotiable  promissory  notes  it  is 
always  permissible  to  show  by  parol  evidence  who  is  the  real 
principal.  Tied.  Com.  Paper,  §  87,  and  authorities  cited.  But 
wherever  the  cases  have  been  reviewed  we  think  it  will  be  found 
that,  although  the  rule  has  been  relaxed  in  those  cases  where  the 
maker  or  drawer  adds  the  word  "  agent,"  or  "  president,"  or  the 
like  after  his  name,  yet  in  negotiable  instruments,  when  the  prin- 
cipal's name  does  not  appear,  he  is  not  liable  on  the  bill  or  note 
as  a  party  to  the  instrument.  Devendorf  v.  Oil  Co.,  17  W.  Va. 
135  ;  Fuller  v.  Hooper,  3  Gray,  341 ;  Williams  v.  Robbins,  16 
Gray,  77;  Pease  v.  Pease,  35  Conn.  131r;Keck'y.  Brewing  Co., 
22  Mo.  App.  187 ;  Bartlett  v.  Tucker,  104  Mass.  339. 

What  we  have  here  said  is  not  in  conflict  with  another  equally 
well-settled  rule,  that  a  party  may  bind  himself  by  another  than 
his  true  name,  where  he  signs  any  instrument  with  intent  to  bind 
himself,  or  signs  any  name  under  which  he  is  shown  to  have  held 
himself  out  to  the  world  and  carried  on  business.  In  these  cases 
he  is  as  much  liable  as  if  he  had  signed  his  true  name.  Bartlett 
V.  Tucker,  104  Mass.  339.  With  this  view  of  the  law,  then,  we 
hold  the  court  erred  in  the  admission  of  parol  evidence  to  show 
that  Jackson  executed  the  three  notes  sued  on  in  third,  fourth, 
and  fifth  counts,  and  in  giving  instruction  No.  8,  as  prayed  by 
plaintiffs.  In  regard  to  the  refusal  to  give  tiie  twenty-third  in- 
struction asked  by  defendant,  we  think  the  court  committed  no 
error.  We  do  not  think  any  such  issue  was  properly  tendered  the 
plaintiffs,  nor  do  we  think  there  was  sufficient  evidence  to  justify 
it,  if  properly  pleaded.  We  are  driven  hy  our  views  of  the  law 
to  affirm  the  judgment  of  the  circuit  court  on  the  first  and  second 

136 


CH.  IV.]  PARTIES    TO   BILLS   AND    NOTES.  ILL.  CAS. 

counts,  and  reverse  the  judgment  on  the  third,  fourth,  and  fifth 
counts.  Hunt  f.  Railway  Co.,  89  Mo.  607;  1  S.  W.  Rep.  127, 
and  cases  cited.     All  judges  of  division  No.  2  concur. 


Executor  as  a  Party  to  Bill  or  Note. 

Schmittler  v.  Simon,  114  N.  Y.  176  (21  N.  E.  172). 

Appeal  from  supreme  court,  general  term,  First  department. 

Action  l)y  Mar}' Schmittler  ogaiust  Adam  Simon,  as  an  acceptor 
of  a  draft  of  which  ihe  following  is  a  copy:  "New  York,  Feb- 
ruary 26,  1877.  Mr.  Adam  Simon,  executor,  will  please  pay  to 
Johannes  Schmittler,  or  his  order,  on  the  first  da}^  of  Jul}',  which 
will  be  the  year  1879,  the  sum  of  nine  hundred  doll.,  with  seven 
per  cent  interest,  to  be  paid,  besides  the  amount,  yearlj',  July 
month,  and  charge  the  amount  against  me,  and  of  my  mother's 
estate.  Wm.  J.  Scharin."  Across  the  face  was  written :  "Ac- 
cept, Adam  Simon,  Executor,"  and  indorsed:  "  Pay  to  the  order 
of  Mary  Schmiitler  tbe  amount  of  note.  Johannes  Schmittler." 
A  trial  resulted  in  a  judgment  of  nonsuit,  which  was  affirmed  by 
the  general  term  (29  Hun,  480,  mem.)^  but  reversed  b}^  the  coui't 
of  appeals  (5  N.  E.  Rep.  452).  A  second  trial  resulted  in  a 
verdict  and  judgment  for  the  plaintiff  for  the  amount  of  the  draft, 
which  was  alfirmed  by  the  general  term  (43  Hun,  640,  me??i. ),  and 
the  defendant  appeals. 

Bkadley,  J.  Upon  the  review  of  a  former  trial,  where  the 
question  presented  had  relation  only  to  the  legal  import  of  the 
terms  of  the  instrument  in  question,  it  was  held  that  it  was  a  bill 
of  exchange,  anil  that  the  defendant  was,  upon  his  acceptance, 
personally  liable  to  the  plaintiff  as  indorsee  of  tlie  paper.  101  N. 
Y.  654  ;  5  N.  E.  Rep.  452.  This  is  the  review  of  the  succeeding 
trial,  and  tiie  admissibilit}'  of  evidence  offered  by  the  defendant  is 
now  the  subject  of  inquiry.  The  defendant  was  executor  of  the 
will  of  R(>ginaScharen,  deceased.  She  was  the  mother  of  the 
drawer  of  the  draft.  There  is  some  evidence  tending  to  prove  that 
the  draft  was  taken  by  the  payee  for  the  plaintiff,  w  ho  was  his 
wife,  or  with  a  view  to  transfer  it  to  her.  'Ihe  defendant  offered 
evidence  tending  to  prove  that  it  was  understood  by  the  plaintiff 
and  her  husbantl  that  the  draft  should  be  taken  upon  the  security 
of  the  drawer's  interest  in  the  estate  of  his  mother;  that  when 
the  draft  was  drawn  it  was  understood  between  the  drawer,  payee, 
and  the  plaintiff  that  it  was  to  be  paid  out  of  such  interest  in  the 
estate  ;  also,  that  the  defendant  then  said,  in  the  presence  of  all 
those  parlies,  that  he  would  not  accept  the  draft,  or  become  lial)le 
upon  it  personally,  and  that  it  was  then  agreed  or  said  between 
them  that  the  defendant  would  accept  the  draft  in  his  capacity  as 
executor,  to  be  paid  only  out  of  the  drawer's  interest  in  his 
mother's  estate.  This  evidence  was  offered  in  various  forms  on 
inquiry,  and,  upon  objection  of  plaintiff's  counsel,  was  excluded, 
aud  exceptions  taken.     The  general  rule  is  that  when  an  agree- 

137 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

ment  is  reduced  to  writing,  it,  as  between  the  parties,  is  deemod 
to  merge  and  overcome  all  prior  or  contemporaneous  negotiations 
and  declarations  upon  the  sul)ject,  and  that  no  oral  evidence  is 
admissible  to  var^^,  explain,  or  contradict  its  terms.  But  it  may 
be  that  it  would  have  been  admissible  for  the  defendant  to  prove, 
if  he  could,  that  his  acceptance  was  not  to  take  effect  as  such 
until  a  certain  event,  then  in  the  future,  and  that  when  the  payee 
and  the  plaintiff  received  it  they  were  advised  of  an  arrangement 
to  that  effect.  Seymour  v.  Cowing,  40  N.  Y.  532  ;  4  Abb.  Dec. 
200  ;  Benton  v.  Martin,  52  N.  Y.  570 ;  Reynolds  v.  Robinson,  110 
N.  Y.  654  ;  18  N.  E.  Rep.  127  ;  Wilson -y.  Powers,  131  Mass.  539  ; 
Walhsv.  Littell,  11  C.  B.  (n.  s.)  368.  In  this  connection  refer- 
ence may  also  be  made  to  the  proposition  that  the  purpose  for 
which  a  written  contract  is  made  may  rest  in  a  collateral  oral  ar- 
rangement, which  may  be  shown,  to  the  effect  that  the  design  of 
it  is  different  from  that  which  its  terms  alone  may  indicate. 
Grierson  v.  Mason,  60  N.  Y.  394 ;  Juillard  v.  Chaffee,  92  N.  Y. 
529  ;  Chapin  v.  Dobson,  78  N.  Y.  74.  These  propositions  are  not 
applicable  when  the  conclusion  is  required  that  the  writing 
contains  the  final  consummation  of  the  entire  agreement 
between  the  parties.  While  the  evidence  so  offered  may  bear 
the  construction  that  there  was  an  understanding  between  the 
parties  to  the  draft  that  the  liability  of  the  defendant  on  the 
acceptance  was  dependent  upon  an  ascertained  interest  of  the 
drawer  in  the  estate  of  his  mother,  and  in  that  event  to  be 
incurred  to  the  extent  oul}'-  of  such  interest,  not  exceeding  the 
amount  of  the  draft,  we  think  such  evidence  cannot  fairly  be  con- 
strued as  tending  to  prove  a  collateral  agreement  suspending  the 
inception  or  operation  of  the  acceptance  until  some  future  event, 
or  as  tending  to  sliow  that  it  was  made  for  a  purpose  independent 
of  the  import  of  its  terms,  within  the  rule  before  mentioned,  and 
therefore  it  is  unnecessary  to  consider  the  question  of  the  appli- 
cabiUty  of  those  propositions  to  negotiable  paper. 

The  consideration  of  a  contract,  in  whatever  form  it  may  have 
been,  may,  as  between  the  immediate  parties  to  it,  be  the  subject 
of  inquiry,  and,  in  an  action  by  the  payee  upon  a  note  made  by 
an  executor  or  administrator,  on  account  of  a  debt  which  his 
testator  or  intestate  left  unpaid,  such  fact,  and  that  the  assets  of 
the  estate  weie  insufficient  to  pay  the  note,  may  be  shown  as  a 
defense,  wholly  or  partially,  as  it  may  appear  that  there  was  an 
entu'e  or  partial  want  of  assets  to  pay  the  debt  represented  by  the 
note.  Bank  v.  Topping,  9  Wend.  273;  13  Wend.  557.  The 
question  in  such  case  is  one  of  consideration  for  the  promise, 
evidenced  by  the  note,  supposed  to  have  been  founded  wholly 
upon  the  assets  of  the  estate  which  the  maker  represented. 
While  the  maker  and  payee  of  a  promissory  note,  and  tbe  drawer 
and  acceptor  of  a  bill  of  exchange,  are  immediate  parties  to  the 
paper,  that  relation  of  privity  does  not  exist  between  the  payee 
and  acceptor,  and,  as  between  them  alone,  the  want  of  consider- 
ation is   no  defense ;    but  the   acceptor,  for  the  purpose  of  his 

138 


CH.  IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

defense  in  that  respect,  must  go  further,  and  prove  that  there 
was  no  consideration  as  between  the  drawer  and  payee.  There 
was  no  purpose  indicated  in  the  evidence  offered  to  do  that,  and 
therefore  it  does  not  seem  to  have  been  competent  for  that 
purpose. 

The  question  now  is  whether  the  e\'idencc  so  offered  was  admis- 
sible for  anj'  purpose.  On  tiie  former  review,  in  referring  to  the 
contention  that  the  draft  was  drawn  upon  a  specific  fund,  the 
court  said:  "Considering  the  question,  as  we  are  comijelkd  to 
do,  from  the  language  of  the  instrument  alone,  we  are  unable  to 
agree  to  the  interpretation  that  the  draft  was  pa3'able  only  from 
a  particular  fund,"  —  and  added:  "While  the  point  is  not  free 
from  doubt,  we  think  a  reasonable  consi  ruction  of  the  draft 
favors  the  conclusion  that  it  [the  fund]  is  mentioned  only  ns  a 
source  of  reimbursement;"  and,  "  if  the  language  of  the  paper 
could  be  considered  at  all  ambiguous,  it  was  tlje  duly  of  the 
defendant  to  limit  his  liability  by  apt  words  of  acceptance  when 
it  was  presented  to  him,  but,  as  it  is,  he  has  unqualifii  dly  prom- 
ised to  pay  a  fixed  and  definite  sum  at  a  specified  time,  and  we 
think  should  be  held  to  the  contract  wdiich  other  parties  were 
authorized,  by  his  acceptance,  to  infer  he  intended  to  make." 
It  does  not  appear  what  view  the  court  may  have  taken  of  tlie 
admissibility  of  evidence  of  the  fact,  and  of  the  fact  itself,  if  it 
had  tlien  appeared,  that  the  pavee  and  the  plaintiff,  when  Ihey 
received  the  draft,  had  been  advised  that  it  was  drawn  and 
accepted  to  be  paid  out  of  the  drawer's  interest  represented  by 
the  defendant  as  executor.  The  queston  tliere  was  solely  one 
of  construction  of  the  instrument  as  represented  by  its  terms, 
and  all  that  the  court  there  necessarily  deteimineci  was  that  it 
did  not  appear  b^^  the  terms  of  the  draft  that  it  was  drawn  ui)on 
a  particular  fund.  That  character  wouhl  not  be  given  to  the 
draft  upon  doubtful  construction,  as  against  the  plaintiff,  wiio 
was  presumed  to  be  a  botia  fide  holder  of  it.  The  fact  that  the 
drawee  was.  in  the  draft,  designated  as  executor,  and  that  he 
added  the  like  designation  to  his  name  subscribed  to  the  accept- 
ance, would  not,  of  itself,  import  any  other  than  a  personal 
relation  of  the  defendant  to  the  instrument,  as  the  word  "  Execu- 
tor" annexed  to  his  name  would  presumptively  be  treated  as 
merely  descriptive  of  the  person,  but  it  migiit  be  given  some 
substantial  significance  by  other  provisions,  if  those  were  such 
as  to  require  it  in  the  instrument,  and  in  a  proper  case  this  might 
be  aided  by  extrinsic  facts. 

The  defendant,  as  executor,  represented  whatever  interest  the 
drawer  of  the  draft  had  in  the  estate  of  Mrs.  Scharen,  deceased, 
and  such  interest  must  be  obtained  by  him  or  whomsoever  shonld 
become  entitled  t  )it  through  the  executor.  Tliat  situation  would 
have  rendered  a  d'aft  upon  the  latter  for  that  purpose,  and  his 
acceptance  so  qualified,  legitimate.  In  that  view  it  would  seem 
that  if  the  unclerstanding  of  the  parties  to  the  draft  and  the 
holder  of  it  was  such,  the  2^^>^n<(  fcicie  import  of  the  word  "  exec- 
ISO 


ILL.   CAS.  PARTIES    TO    BILLS    AND    NOTES.  [CH.   IV. 

utor  "  might  be  overcome  by  evidence  to  the  effect  that  it  was 
used  to  qualify  the  liability  of  the  defendant,  and  to  show  tliat  it 
was  assumed  in  his  representative  capacity  only.  This  rule  is 
applicable  to  other  relations  of  a  representative  character,  in  like 
manner  indicated,  alihough  the  contract  docs  not,  in  its  terms, 
purport  to  have  been  made  by  or  for  the  prin(i[)al,  otherwise 
than  by  way  of  designation  of  the  representative  character  of  the 
person  making  it.  The  like  presumption  exists  in  that  as  in  this 
c:  so,  that  the  added  designation  is  descriptio  inrsoiim;  and  the 
right  to  show  the  fact  to  be  otherwise  is  d' pendent  upon  the 
knowledge  of  the  other  i)arty  to  the  contract  that  such  was  the 
purpose  when  it  was  made.  Rrockway -y.  Allen.  17  Wend.  40; 
Paddock  V.  Brown,  6  Hill,  530;  Ilicks  v.  Hinde,  9  Barb.  528; 
Horton  V.  Garrison,  23  Barb.  176;  Bank  v.  Leonard,  40  Barb. 
136  ;  Bowne  v.  Doiigla-s,  38  Birb.  312  ;  Lee  v.  M.  E.  Church,  etc., 
52  Barb.  116  ;  Babcock-u.  Beman,  11  N.  Y.  200.  Insucli  case  it  is 
open  to  explanation  by  evidence  to  show  that  the  purpose,  as 
understood  by  the  parties  to  the  transaction,  was  that  the  party 
so  executing  the  contract  intended  to  assume  no  personal  liability. 
(HoodiJ.  Hallenbe  k,  7  Hun,  362-365,  and  cases  before  cited), 
and,  when  aided  by  sucii  evidence,  the  fact  that  a  payee  in  a  note 
who  indorses  it,  and  a  drawee  in  a  draft  who  accepts  it,  are,  as 
well  as  in  the  iudor-ement  and  :i(ce|)tance,  in  that  manner  desig- 
nated, may  be  entitled  to  S'me  significance.  Bowne  t).  Douglass, 
supra  ;  Babcock  v.  Beman,  1 1  N.  Y.  200.  The  distinction  between 
the  cases  referred  to  and  the  present  one  is  that  there  was  a  principal 
wh'  se  representative  made  the  contract,  which  was  a  fact  essen- 
tial to  the  application  of  such  rule  upon  the  question  of  liability, 
while  here  the  defendant  as  executor  had  no  principal  party  to 
charge  with  liability  upon  his  contract,  and  coul  I  represent  no 
person  as  such.  But  he  had  duties  to  perform  as  executor,  in 
relation  to  the  estate  of  his  testatrix,  among  which  was  the  duty  to 
render  his  account,  and  pay  over,  for  the  benefit  of  persons 
interested,  such  shares  as  they  were  entitled  to  from  the 
estate.  And  if  it  was  intended  by  the  draft  and  acceptance, 
and  such  construction  can,  by  aid  of  extrinsic  facts,  be  allowed, 
that  the  defendan',  shoidd  be  charged  in  the  line  of  his 
representative  duty  merely,  it  would  follow  that  he  would  be 
required  to  pay  to  the  holder  of  the  instrument  to  the  extent  of 
the  sum  mentioned,  from  the  interest  of  the  drawer  in  the  estate, 
if  it  were  sufficient  for  the  purpose.  That  would  be  a  proper  lia- 
bility of  the  defendant  as  such  trustee,  and  the  drawer  and  payee 
might  depend  upon  tlie  existence  of  that  fund  for  paj'ment.  In 
the  case  of  agency  there  is  no  fund,  but  a  principal,  to  charge. 
It  is  difficult  to  see  any  well-founded  distinction  for  the  applica- 
tion in  the  two  classes  of  cases  of  the  rule  which  permits  the 
Introduction  of  evidence  to  show  the  intention  and  purpose  in  that 
respect  of  the  parties  to  and  interested  in  the  transaction,  who 
were  advised  of  such  purpose  when  they  assumed  their  relation  to 
the  contract. 
140 


CH.   IV.]  PARTIES    TO    BILLS    AND    NOTES.  ILL.   CAS. 

In  Pinney  v.  Administrators,  etc.,  8  Wend.  .500,  this  question 
did  not  arise.  Tin  re  the  administrators  had  been  charged  by 
judgment  upon  their  bond  to  a  third  party,  on  account  of  a  debt 
due  from  their  intestale,  and  which  they  alleged  as  a  liability  of 
the  estate,  and  a  d(  ficiency  of  a'-sets,  by  waj^  of  defense.  The 
replication  charged  that  Ihe  defendants  had  sufficient  assets  to 
pay  the  judgment  and  the  plaintiffs  claim,  etc.  The  question 
arose  upon  the  denuirrer  to  the  replication.  The  plaintiff  had 
judgment,  with  leave  to  the  defendant  to  rejoin.  The  court  held 
that  the  judgment  upon  the  bond  of  the  administrators  did  not 
bind  the  estate,  although  the  bond  purported  to  have  been 
made  by  them  in  their  representative  capacit3\  It  is  evident, 
if  they  had  any  defense  within  tlie  case  of  Bank  v. 
Topping,  supra,  it  did  not  survive  the  recovery  of  the  judg- 
ment upon  it.  If  tlie  presumption  arising  out  of  the  prima  facie 
relation  assumed  by  the  defendant  to  the  draft  in  question  pre- 
vail, he  must  be  pirsoiinlly  liable  within  the  doctrine  of  the  case 
last  cited.  We  are  not  prepared  to  say  that  in  the  present  case 
the  defense  will  be  aided  by  the  words,  "  against  me  and  b}^  my 
mother's  estate,"  in  the  draft,  or  any  construction  which  may 
he  put  upon  them.  There  is  certainly  some  obscurity  as  to  the 
purpose  for  which  they  were  used,  and  they  may  be  said  to  pre- 
sent some  ambiguity.  F>  r  the  purpose  of  the  construction  of 
the  instrument,  no  words  can  be  added  or  taken  from  its  pro- 
visions;  but  where  the  words  used,  in  their  application  to  an 
instrument  of  which  they  are  a  part,  are  not  entirely  intelligible, 
parol  evidence  of  the  circumstances  attending  its  execution  may, 
as  between  the  parties,  be  admissible  to  aid  in  the  interpretation 
in  its  application  of  the  language  so  used.  Fish  v.  Hubbard,  21 
Wend.  001-0(52;  Fields.  Munson,  47  N.  Y.  211. 

For  the  reasons  before  given,  we  think  the  rejected  evidence 
referred  to  should  have  been  receivid,  as  bearing  upon  the  under- 
standing of  the  relation  and  the  character  of  liability  the  defend- 
ant assumed  by  its  acceptance  of  the  draft.  It  is  deemed 
admissible,  in  view  of  the  designation  which  was  given  to  the 
defendant  in  the  draft,  and  in  his  acceptance  of  it,  and  by  what 
appears  on  the  face  of  the  draft.  Hicks  v.  Ilinde,  9  Barb.  531  ; 
Powder  Co.  V.  Siiisheiner,  48  Md.  411.  This  view  is  taken  upon 
the  assumption,  as  the  offered  evidence  indicated,  that  the  plain- 
tiff and  lur  husband  were  advised  wliiu  they  received  the  draft 
of  the  facts  embraced  in  the  offers  of  proof.  Otherwise  the  draft, 
as  to  the  plaintiff,  must,  as  on  the  former  review,  be  treated  as  a 
negotiable  bill  of  exchange,  and  no  other  interijretation  can,  l)y 
evideiice  of  extrinsic  circumstances,  be  given,  nor  for  that  pur- 
pose will  the  evidence  be  admissible.  The  fact  that  the  draft  was 
payable  at  a  particular  time  and  place  may  be  a  circumstance 
entitled  to  consideration  upon  the  merits,  but  they  do  not  have 
the  conclusive  effect  claimed  for  them  by  the  plaintiff's  counsel, 
and  the  same  be  said  in  respect  to  the  payments  heretofore  made 
by  the  defendant  of  interest  upon  the  amount  of  the  draft.     We 

141 


ILL.  CAS.  PARTIES   TO   BILLS    AND    NOTES.  [CH.  IV^. 

do  not  consider  the  effect  of  the  acceptance  by  way  of  admission 
of  assets  in  his  hands  belonging  to  the  estate,  or  the  force  to 
which  it  may  be  entitled  as  such.  The  only  question  now  here 
arises  upon  exceptions  to  the  exclusion  of  evidence,  which  seem 
to  have  been  well  taken,  and  for  that  reason  the  judgment  should 
be  reversed,  and  a  new  trial  granted,  costs  to  abide  the  event. 
All  concur,  except  Vann,  J.,  dissenting. 

142 


CHAPTER    V. 

THE    CONSIDERATION,    AS    IT    AFFECTS    BONA    FIDE    OWNER- 
SHIP. 

Section  50.  Necessity  of  consideration  —  What   instruments  import  a 
consideration. 

51.  Between  whom  question  of  consideration  may  be  raised  — 

Bona  fide  holders. 

52.  Real  and  apparent  relation  of  parties. 

53.  One  consideration  supporting  the  obligations  of  more  than 

one. 

54.  Accommodation  paper. 

55.  Money    consideration  —  Contemporary    loans,     future    ad- 

vances and  existing  debts. 
5G,  AYhen  is  a  pledgee  a  bona  fide  holder  for  value. 

§  50.  Necessity  of  consideration  —  What  instruments 
import  a  consideration. —  It  is  the  universal  rule  of  the  En- 
glish and  American  law  that  no  executory  contract  can  be 
enforced  in  the  courts,  unless  it  he  supported  by  a  valuable 
consideration.  And  the  rule  applies  to  bills  and  notes  with- 
out qualilication  ;  except  that  by  the  commercial  law,  every 
species  of  commercial  paper,  bills,  notes,  checks,  etc.,  im- 
port a  consideration.  Whenever,  therefore,  a  bill,  note  or 
check,  is  proven  to  have  been  duly  executed  and  delivered,  a 
sufficient  consideration  for  such  a  contract  will  be  presumed, 
until  the  want  of  consideration  is  affimatively  established.^ 
And,  although  it  was  once  hold  in  England  to  be  necessary 
to  the  validity  of  negotiable  instruments  that  a  considera- 
tion 1)0  acknowledged  in  it,  usually  by  the  employment  of 
the  phrase  "  for  value  received,"  it  is  now  generally  held 
that  no    such   acknowledgment  is  necessary,   unless   local 

1  Bristol  V.  Warner,  19  Conn.  7;  Townsend  v.  Derby,  3  Met.  3G3; 
Carnwright  v.  Gray,  127  N.  Y.  92  (27  N.  E.  835)  ;  Hughes  v.  Wheeler,  8 
Cow.  77;  Foster  V.  Paulk,  41  Me.  425;  Ilartman  v.  Shaffer,  71  Pa.  St. 
312;  Campbell  v.  McCormac,  90  N.  C.  441;  lugersoll  v.  Martin,  58  Md. 
67  (42  Am.  Rep.  322);  Martin  u.  Stone  (N.  H.),  29  A.  845;  Mat- 
tesou  V.  Morris,  40  Mich.  52;  Wilson  v.  Wilson,  26  Oreg.  315;  38  P.  189. 

143 


§  51  THE   CONSIDERATION.  [CH.  V. 

statutes,  regulating  such  paper,  expressly  require  it.^ 
This  presumption  of  consieleration  does  not  attach  to 
every  kind  of  commercial  obligation.  It  applies  only  to 
sealed  instruments, ^  and  negotiable  or  quasi-negotiable 
paper.  While  the  omission  of  the  words  of  negotiability, 
from  what  would  otherwise  be  a  negotiable  bill  or  note, 
will  not  destroy  this  presumption  of  consideration;^  the 
presumption  does  not  apply  to  a  bill  or  note,  which  is 
altogether  non-negotiable,  because  it  lacks  one  or  more 
essential  elements  of  negotiable  paper  ;  as,  for  example, 
where  the  time  of  payment,  or  the  amount  payable,  is 
uncertain.*  In  such  cases,  the  presumption  will  arise  only 
from  an  express  acknowledgment  of  the  consideration.^' 
The  presumption  of  consideration  applies,  not  only  to  the 
original  note  or  bill,  but  likewise  to  all  indorsements  of  the 
same,^  and  to  acceptance  of  bills. ^ 

§  51.  Between  whom  question  of  consideration  may 
be  raised  —  Bona  fide  holders. —  It  is  a  general  rule  of 
the  law  of  Commercial  Paper,  that  defenses,  not  apparent 
on  the  face  of  the  instrument,  can  be  set  up  against  only  the 
original  parties  and  those  subsequent  indorsees  and  holders 
who  take  the  instrument  with  notice  of  the  defense,  or 
without  value.  The  illegality  or  want  of  consideration  is 
one  of  those  defenses,  which  do  not  generally  appear  upon 

'■  See  ante,  §  24. 

2  Conway  v.  Williams,  2  Hun,  G42;  Webster  v.  Bailey,  118  N.  C.  193 
(24  S.  E.  9). 

3  Haydock  v.  Lynch,  2  Ld.  Baym.  1553;  Averett's  Adm'x  v.  Booker, 
15  Gratt.  163  (76  Am.  Dec.  203).  And  see  Coursin  v.  Ledlie,  31  Pa.  St. 
506. 

4  Atkinson  v.  Manks,  1  Cow.  691;  Bilderbach  v.  Burlingame,  27  III. 
338;  Franks.  Irgins,  27  Minn.  43  (6  N.  AV.  380);  Bristol  v.  Warner,  19 
Conn.  7;  Birclebach  v.  Wilkins,  22  Pa.  St.  26. 

5  Bourne  v.  Ward,  51  Me.  191;  Courtney  v.  Doyle,  10  Allen,  122; 
Wingo  V.  McDowell,  8  Rich.  446.     But  see  contra,  Stewart  w.  Street,  10 

Cal.  372. 

6  Dumont  v.  Williamson,  18  Ohio  St.  515  (98  Am.  Dec.  186);  Con- 
nerly  v.  Planters  &c.  Ins.  Co.,  66  Ala.  432;  Johnston  v.  Dickson,  1  Blackf. 
256. 

1  Kendall  v.  Galvin,  15  Me.  131  (32  Am.  Dec.  141). 

144 


CH.  v.]  THE    CONSIDERATION.  §   51 

the  face  of  a  bill  or  note.  Such  a  defense  would  therefore 
prevail  in  any  action  l)et\ve(>n  the  originul  ))arties  above 
described,  between  maker  and  payee  of  a  note,  between 
the  drawer  or  acceptor  and  payee  of  a  bill,  etc.^  But, 
in  order  that  want  of  consideration  may  be  a  good  de- 
fense to  an  action  on  the  note  or  bill  by  an  indorsee  or 
other  subsequent  hfdder,  it  must  be  proven  that  the  subse- 
quent holder  is  not  a  hona  fide  holder,  i.  e.,  a  holder  for 
value  and  without  notice.-  An  exception  to  this  general 
rule  is  maintained  by  most  of  the  cases  in  respect  to  the 
defense  of  illegality  of  consideration.  Where  the  consid- 
eration is  declared  by  decisions  of  the  courts,  or  by  statute, 
to  be  simply  void  on  account  of  illegality;  a  bill  or  note, 
based  upon  such  illegal  consideration,  would  be  void  as  to 

1  Hunt  V.  Mason,  21  D.  C.  181 :  Preble  v.  Hunt,  85  Me.  267  (27  A.  151) ; 
Eastman  v.  Shaw,  C5  N.  Y.  522;  Shaw  v.  Cutwater,  77  Him,  87;  Thomas 
V.  Watkins,  10  AVis.  6W;  Gibert  v.  Sie^s,  40  La.  Ann.  G07  {\  So.  874); 
Bank  of  Ohio  Valley  v.  Lockwood,  13  W.  Va.  392  (31  Am.  Rep.  768); 
Pettyjohn  v.  Liebscher,  02  Ga.  149  (17  S.  E.  1007);  Toombs  r.  West,  94 
Ga.  280  (21  S.  E.  522);  Third  Nat.  Bk.  v.  Harrison,  3  McCrary,  316;  Pax- 
son  V.  Nields,  137  Pa.  St.  385  (20  A.  1016);  Ingersoll  v.  Martin,  58  Md. 
67  (42  Am.  Rep.  322) ;  Schroeder  v.  Nielsen,  39  Neb.  335  (57  N.  W.  993); 
Williams  v.  Forbes,  114  111.  171  (28  N.  E.  46.S) ;  Richardson  v.  Richard- 
son, 148  III.  563  (a6  N.  E.  608) ;  Hanks  v.  Brown,  79  Iowa,  560  (44  N.  W. 
811);  Merril  v.  Packer,  80  Iowa,  543  (45  N.  W.  1076).  But  want  of  con- 
sideration between  drawer  and  acceptor,  or  between  the  acceptor  and 
payee,  is  no  defense  if  he  has  paid  a  valuable  consideration  to  the 
drawer.  Hoffman  v.  Bmk  of  Milwaukee,  12  Wall.  191.  Nor  can  the 
acceptor  raise  the  ques  ion  of  failure  of  corsideration,  where  there  is 
a  consideration  between  himself  and  the  drawer  of  the  bill,  and  there  is 
no  consideration  between  the  drawer  and  the  payee.  Hunt  v.  Johnston, 
96  Ala.  130  (11  So.  387). 

2  Sweetser v.  French,  13  Met.  262;  Kellogg  r.  Curtis,  69  Me.  212  (31 
Am.  Rep.  273);  Goodman  v.  Simonds,  ^0  How.  343;  Collins  v.  Gilbert, 
94  U.  S.  753;  Matthews  v.  Crosby,  56  N.  H.  21;  Mechanics'  &c.  Bk.  v. 
Crow,  CO  N.  Y.  85;  Har','er  r.  Worrall,  69  N.  Y.  370  (25  Am.  Rep.  206) ; 
Sloan  r.  Union  Banking  Co.,  67  Pa.  St.  470;  Nat.  Bk.  of  America  v.  Nat. 
Bk.  of  111  ,  164  111.  503  (45  N.  E.  968) ;  Hunter  v.  Parsons,  22  Mich.  96; 
Gotzian  v.  Sleiukamp,  53  Minn.  462  (55  N.  W.  602)  ;  Kahm  v.  King  Bridge 
Mfg.  Co.,  16  Kan.  530;  Elhridge  v.  Gallagher,  55  Miss.  458;  Rea  v. 
McDonald  (Minn. '97),  71  N.  W.  11;  New  v.  Walker,  108  Ind.  365  (9  N. 
E.  386) ;  Van  Meter  r.  Spurrier,  94  Ky.  22  (21  S.  W.  337);  Fernekes  v. 
Bergenthal,  69  Wis.  464  (34  N.  W.  238) ;  De  Long  v.  Barnes,  45  Ohio  St. 
237  (12  N.  E.  735.) 

10  145 


§  51  THE   CONSIDERATION.  [CH.  V. 

the  original  parties,  and  others  who  take  it  with  notice  or 
without  value,  but  it  could  be  enforced  by  a  bona  fide  holder. ^ 
But  where  the  consideration  is  made  illegal  by  statute,  and 
the  statute  expressly  declares  the  contract  founded  on  such 
consideration  to  be  absolutely  void,  the  language  of  the 
statute  is  given  its  full  effect;  and  the  courts  have  held 
that  the  defense  will  prevail  in  such  cases,  even  against 
bona  fide  holders  of  negotiable  papers. ^  The  same  effect 
is  produced  on  the  rights  of  bona  fide  holders,  as  well  as 
on  the  rights  of  the  immediate  parties,  whether  the  ille- 
gality affect  the  whole  or  only  a  part  of  the  consideration, 
where  the  consideration  is  one  and  indivisible.  But  where 
a  bill  or  note  is  given  for  two  distinct  and  separate  consid- 
erations, the  instrument  is  void  or  voidable  only^ro  ianto, 
where  only  one  of  the  considerations  is  illegal.^  So,  also, 
where  the  partial  invalidity  is  due  to  a  partial  failure  or 
an  innocent  misstatement  of  the  amount,  the  note  will  be 
invalidated  pro  tanto.^  The  question,  on  whom  rests  the 
burden  of  proof  of  bona  fide  ownership,  where  the  defense 
is  want,  failure  or  illegality  of  consideration  is  discussed  in 
a  subsequent  chapter.* 

1  Holmes  v.  William?,  10  Paige,  326  (40  Am.  Dec.  250) ;  Grimes  v. 
Hillenbrand,  4  Hun,  354;  Bangs  v.  Hornick,  30  Fed.  97;  Doolittle  v. 
Lyman,  44  N.  H.  608;  Fay  v.  Fay,  121  Mass.  561 ;  Gorham  v.  Keyes,  137 
Mass.  583;  Sondheim  v.  Gilbert,  117  Ind.  71  (18  N.  E.  776);  Town  of 
Eagle  u.  Kohn,  84  111.  292;  Crawford  v.  Spencer,  92  Mo.  498  (4  S.  W. 
713);  Lynchburg  Nat.  Bank  v.  Scott,  91  Va.  652  (22  S.  E.  487) ;  Corbin 
V.  Wachhorst,  73  Cal.  411  (15  P.  22);  Bradshaw  v.  Van  Valkenburg,  97 
Tenn.  316  f37  S.  W.  88). 

2  Hatch  V.  Burroughs,  1  Woods,  439;  Bayley  v.  Tabor,  5  Mass.  286 
(4  Am.  Dec.  57)  ;  Weed  v.  Bond,  21  Ga.  195;  Woods  v.  Armstrong,  54  Ala. 
150  (25  Am.  Rep.  071);  Tatum  v.  Kelley,  25  Ark.  209  (94  Am.  Dec.  717); 
Glen  V.  Farmers'  Bank,  70  N.  C.  191 ;  Union  Bank  of  Rochester  v.  Gil- 
bert, 83  Hun,  417;  Ramsdell  v.  Morgan,  16  Wend.  574;  Hunt  v.  Knicker- 
bocker, 5  Johns.  372 ;  Griffiths  v.  Wells,  3  Benio,  226 ;  Union  Nat.  Bank  v. 
Brown  (Ky.  '97),  41  S.  W.  273. 

3  Brigham  v.  Potter,  14  Gray,  522;  Saratoga  Bank  v.  King,  44  N.  Y.  87; 
Guild  V.  Belcher,  119  Mass.  257;  Widoe  v.  Webb,  21  Ohio  St.  431  (5  Am. 
Rep.  664)  ;  Barnard  v.  Backhaus,  52  Wis.  593  (6  N.  E.  252;  9  N.  E.  595)  ; 
Everhart  v.  Puckett,  73  Ind.  409. 

4  Phelps  Dodge  &  Palmer  Co.  v.  Hopkinson,  61  111.  App.  400. 
^  See  post,  chapter  IX.  on  Rights  of  Bona  Fide  Holders. 

146 


CH.  v.]  THE    CONSIDERATION.  §  52 

If  the  consideration  of  an  original  note  or  bill  is  illegal, 
the  illegality  will  taint  the  renewal  of  the  instrument,  in 
every  case  where  the  entire  consideration  is  illegal;  and 
where  only  a  part  of  the  consideration  is  illegal,  the  renewal 
will  8till  be  subject  to  the  defense  of  illegality  ^jro  tanto,  un- 
less the  illegal  part  of  the  consideration  has  been  excluded 
from  the  renewal.  And  the  same  rule  governs,  where 
one  note  or  bill  is  given  in  renesval  of  two  or  more  original 
bills  or  notes,  one  of  which  is  founded  upon  an  illegal  con- 
sideration.^ But  where  the  proceeds  of  the  negotiation  of 
the  new  note  are  applied  without  the  knowledge  of  the 
payee  to  the  settlement  of  the  old  note,  which  is  tainted  by 
fraud  or  illegality  of  the  consideration,  the  second  note  is 
valid. ^ 

§  52.  Real  and  apparent  relation  of  parties. — The  real 

relation  of  the  parties  does  not  always  a[)pear  on  the  face 
of  the  paper;  and  whenever  the  apparent  relation  of  the 
parties  differs  from  the  real,  it  is  always  competent  for  the 
purj)()se  of  admitting  or  excluding  the  defense  of  con- 
sideration, to  show  by  parol  evidence  what  the  true  rela- 
tion of  the  parties  is.  Thus  the  name  of  the  payee  and  in- 
dorsee is  often  left  blank,  and  the  blank  filled  up  afterwards 
with  the  name  of  a  subsequent  holder,  thus  making  him 
appear  as  the  payee  or  prior  indorsee.  In  all  such  cases, 
it  is  competent  for  such  a  person  to  show  that  he  is  not  the 
original  payee  or  immediate  indorsee,  and  thus  exclude  the 
defense  of  want  or  illegality  of  the  consideration  from  his 
actio'.i  on  the  instrument.^  It  may  also  be  shown  that  the 
drawer,  instead  of  the  acceptor,  is  the  primary  debtor,  thus 

1  Doty  V.  Knox  Co.  Bank,  10  Ohio  St.  133;  Alabama  Nat.  Bank  v.  Hal- 
sey,  109  Ala.  19G  (19  So.  520);  Wugner  v.  Biering,  73  Tex.  89  (11  S.  W. 
155) ;  Exeter  Nut.  Bank  v.  Orchard,  39  Neb.  485  (58  N.  VV.  144) ;  Kash  v. 
Farley,  91  Ky.  314  (15  S.  W.  8C2). 

2  Buchanan  v.  Drovers'  Nat.  Bank,  55  Fed.  223;  6  U.  S.  App.  5G6; 
Ross  V.  Wehsttr,  G3  Conn.  G4  (2G  A.  476).  See  Cohn  v.  Ilusson,  113  N. 
Y.  CG2  (21  N.  E.  703). 

3  II«)ffinau  V.  Bank  of  Milwaukee,  12  Wall.  181;  Nelson  v.  Cowing,  6 
Hill,  33G;  Ahlrich  v.  Stockwell,  9  Ahen,  45;  Rich  v.  Starbuck,  51  Ind.  87; 
Glascock  V.  Robards,  14  Mo.  350  (55  Am.  Dec.  108). 

147 


K 


§  53  THIC    CONSIDERATION.  [CH.  V. 

rebutting  the  general  piesiiinption  that  the  acceptor  is  the 
primary  debtor,  where  the  question  arises  between  the 
immediate  parties,  the  drawer  and  the  acceptor.  But  as  to 
all  other  parties,  the  presumption,  that  the  acceptor  is  the 
primary  debtor,  is  conclusive. ^  In  no  case  can  the  real 
1  elation  of  the  parties  be  shown  to  be  different  from  their 
apparent  relation,  as  against  a  subsequent  bona  fide  holder.^ 

§  53.  One  considei'ation  supporting  the  obligations 
of  more  than  one. —  Not  only  may  the  promise  of  one  be 
supported  by  a  consideration  moving  to  another,  as  in  the 
case  of  a  guarantor  ;  but  the  same  consideration  will  sup- 
port the  promises  of  all  who  are  induced  thereby  to  assume 
obligations.  Co-makers  of  bills  or  notes,  whether  as  joint- 
principals,  or  as  principal  and  surety,  are  almost  invariably 
bound  bv  one  consideration, -"^  This  is  likewise  the  case  with 
one  whoindorses  f'oranother's  accommodation, if  made  when 
or  before  the  loan  was  negoti;itod  ;  the  indorsement  consti- 
tutes a  part  of  the  original  agreement  and  needs  no  independ- 
ent consideration.*  But  in  every  case,  where  parties  join  in 
the  assumption  of  the  same  liability  as  co-makers  of  a  note, 
or  of  different  liabilities  arising  out  of  the  same  transaction, 
as  maker  and  indorser  ;  the  promises  of  all  must  be  made 
before  the  consideration  is  executed,  in  order  that  the 
one  consideration  may  support  all  the  promises.  An 
executed     consideration    cannot     support     a     subsequent 

1  Turner,  Wilson  &  Co.  v.  Browder,  5  Bush,  216;  Trego  v.  Lowery,  8 
Neb. 238. 

2  Munroe  v.  Bordier,  8  C.  B.  862;  U.  S.  Nat.  Bank  v.  First  Nat.  Bank, 
64  Fed.  985;  13  C.  C.  A.  472;  South  Boston  Iron  Co.  v.  Brown,  63  Me. 
139 ;  Lea  v.  Cassen,  61  Ala.  312 ;  First  Nat.  Bank  v.  Weston,  88  Hun,  29. 

3  Kinsman  v.  Birdsall,  2  E.  D.  Smith,  395;  Hoxie  v.  Hodges,  1  Oreg. 
251;  Hapgood  v.  Policy,  35  Vt.  649;  Rutland  v.  Brister,  53  Miss.  683; 
McClelland  v.  McCle'hmd,  42  Mo.  App.  32. 

4  Austin  V.  Bovd,  24  Pick.  64;  Robertson  v.  Rowell,  158  Mass.  94  (32 
N.  E.  898);  Powers  v.  French,  1  Hun,  582;  Leonard  v.  Sweetzer,  16  Ohio, 
1;  Seyfert  v.  Edison,  45  N.  J.  L.  (16  Vroora)  393;  Brenner  v.  Guuder- 
sheimer,  14  Iowa,  82;  Hoover  v.  McCormick,  84  Wis.  215  (54  N.  W.  505)  ; 
Emery  V.  Hobson,  62  Me.  578  (16  Am.  Rep.  513;  ;  North  Atchison  Bk.  v. 
Gray,  114  Mo.  203  (21  S.  W.  479) ;  Leverone  v.  Hildreth,  80  Cal.  139  (22 
P.  72). 

148 


CH.  V."I  THE    CONSIDERATION.  §   54 

promise.  If,  therefore,  after  the  debt  is  contracted 
and  the  note  delivered,  the  maker  should  procure 
the  signature  of  another  on  such  note,  whether  as  co- 
maker, suiefy  or  indorscr,  this  later  sipjnature  does  not 
create  any  liability  in  respect  to  the  parlies  in  immediate 
privity  with  the  obligor,  unless  it  is  supported  by  a  fresh 
consideration.^  Where,  however,  the  subsequent  indorse- 
ment or  signing  of  the  paper  is  made  in  performance  of  a 
prior  promise  to  the  payee,  to  so  indorse  the  pai)er  as  an 
additional  inducement  for  the  loan  or  other  consideration 
of  the  note,  it  is  held  that  no  additional  consideration  is 
needed  to  hold  the  indorser  liable.  And  the  indorser  will  be 
bound  by  his  subsequent  indorsement,  under  these  circum- 
stances, whether  the  prior  promise  of  a  subsequent  indorse- 
ment was  made  b}'  him  or  by  the  maker.  It  is  the  fact, 
that  the  payee  made  his  loan  in  reliance  upon  this  promise 
of  an  additional  indorsement,  and  not  the  participation  of 
the  indorser  in  making  the  promise,  or  his  knowledge  of 
the  promise,  which  makes  the  original  consideration  suflS- 
cient  to  support  the  indorsement.^ 

§  54.  Accommodation  paper, —  When  one  lends  his 
mercantile  credit  to  another,  by  signing  his  name  to  an 
instrument  in  the  character  of  maker,  drawer,  acceptor  or 
indorser;  the  instrument,  so  far  as  such  signature  is  con- 
cerned, is  called  accommodation  paper.  The  obligation, 
arising  out  of  this  signature,  is  assumed  fv)r  the  accom- 
modation  of  another,  and  is  not  su[)porte<l  by  any  con- 
sideration moving  to  the  person  so  signing.     Therefore,  as 

»  Good  V.  Martin,  95  U.  S.  90;  Stone  v.  White,  8  Gray,  589;  Pratt  v. 
Hedden,  121  Mass.  IIG;  Sawyer  v.  Fernald,  59  Mu.  500;  Gay  v.  Mott,  43 
Ga.  252;  Grossman  v.  May,  08  Ind.  242;  Williams  v.  Williams,  67  Mo. 
661;  Joslyn  v.  Collinson,  26  III.  61;  Briggs  v.  Downing,  48  Iowa,  550; 
Cloptoii  V.  Hull,  51  Miss.  482;  First  N;it.  Bank  v.  Cecil,  23  Oreg.  58  (31 
P.  61  ;  32  P.  393);   Rudolph  v.  Brewer,  90  Ala.  189  (U  So.  314). 

-  Moies  V  Bird,  11  Mass.  436  (6  Am.  Dec.  179);  Ilawkes  v.  Phillips, 
7  Gray,  284;  Pauly  v.  Murray,  110  Cal.  13  (42  P.  313;  Winders  v.  Sperry, 
96  Cal.  194  (31  P.  6);  McNau;;ht  v.  McClaughry,  42  N.  Y.  22  (1  Am. 
Rep.  487);  IIarrinp;ton  v.  Brown,  77  N.  Y.  72;  Steers  v.  Holmes,  79 
Mich.  430  (U  N.  W.  922).     See  Pratt  v.  Hedden,  121  Mass.  116. 

149 


§   54  THE    CONSIDERATION.  [CH.  V. 

between  the  accommodating  and  the  accommodated  parties, 
proof  of  the  want  of  consideration  would  defeat  the  action. 
As  between  these  parties,  the  accommodation  paper  is  a 
valueless  blank,  and  continues  so,  until  it  has  been  nego- 
tiated; when  it  becomes  enforceable  by  the  holder  for  value 
ao-ainst  all  the  prior  parties,  including  the  accommodation 
indorser  or  co-maker.  And  until  it  has  been  negotiated, 
the  accommodation  indorser  may  rescind  his  indorsement, 
and  demand  a  surrender  of  the  instrument  or  a  cancella- 
tion of  signature.^ 

The  fact,  that  the  holder  for  value  knows  that  the  in- 
strument is  accommodation  paper  as  to  one  or  more  of  the 
obligors,  does  not  affect  the  liability  of  such  accommodation 
obligors  to  such  hona  fide  holder  ;  for  the  money,  which 
is  paid  out  by  the  latter  in  negotiation  of  the  paper,  is 
sufficient  consideration  to  bind  all  those  who  have  already 
signed.^ 

The  accommodation  indorser  is  also  bound  to  a  pledgee 
of  the  accommodation  paper,  to  the  amount  of  the  debt  for 
which  the   paper  has  been  pledged ;   certainly,  where  the 

1  French  v.  Bank  of  Columbia,  4  Crauch,  141;  Martin  v.  Marshall,  60 
Vt.  321  (13  A.  420') ;  Comstocls  v.  Ilier,  73  N  Y.  269  (29  Am.  Rep.  142)  ; 
Macey  m.  Kendall,  33  Mo.  104;  Clark  v.  Thayer,  105  Mass.  216  (7  Am. 
Rep.  511;;  Messmore  v.  Meyer,  57  N.  J.  Eq.  31  (27  A.  938);  Stephens  v. 
Monongahela  Nat.  Bank,  88  Pa.  St.  157  (32  Am.  Rep.  438);  Martin  v. 
Muncy,  40  La.  Ann.  190  (3  So.  640);  Devereaux  v.  Phillips' Estate,  97 
Mich.  104  (56  N.  W.  228);  Berkeh  y  v.  Tinsley,  88  Va.  1001  (14  S.  E. 
842)  ;  Second  Nat.  Bank  v.  Howe,  40  Mian.  390  (42  N.  W.  200)  ;  Pray  v. 
Rhodes,  42  Minn.  93  (43  N.  W.  838).  There  is  no  implied  revocation  of 
an  accommodation  indorsement,  -where  the  indorser  dies  before  nego- 
tiation of  the  paper.     Clark  v.  Thayer,  105  Ma>s.  216  (7  Am.  Rep.  511). 

2  Israel  v.  Gale,  77  Fed.  532;  23  C.  C.  A.  274;  Austin  v.  Boyd,  24 
Pick.  64;  Kayser  v.  Ilodopp,  116  Ind.  428  (19  N.  E.  297);  Grant  v.  Elli- 
cott,  7  Wend.  227;  Nat.  Bank  of  N.  A.  v.  White,  19  App.  Div.  390  (46  N. 
Y.  S.  555)  ;  Bro'oks  v.  Hay,  23  Hun,  372  ;  First  Nat.  Bk.  v.  Alton,  60  Conn. 
402  (22  A.  1010);  Seyfert  v.  Edison,  44  N.  J.  L.  (16  Vroom)  393;  Waite 
V.  Kalmisky,  22  111.  App.  382;  First  Nat.  Bk.  v.  Adam,  138  111.  483  (28 
N.  E.  955);  Holmes  v.  Bemis,  124  III.  453  (17  N.  E.  42);  Rea  v.  McDon- 
ald (Minn. '97),  71  N.  W.  11 ;  Weill  V.  Trosclair,  42  La.  Ann.  171  (7  So. 
232)  ;  Thatcher  v.  West  R  ver  N.  Bk.,  19  Mich.  196;  PhlUer  v.  Patterson, 
168  Pa.  St.  468  (32  A.  26);  Norfolk  N.  Bli.  v.  Griffln,  107  N.  C.  173  (11 
S.  E.  1049). 

150 


CH.  v.]  THE    CONSIDERATION.  §   55 

pledge  is  given  for  a  contemporaneous  loan,^  But  where 
the  accommodation  paper  is  pledged  for  an  antecedent  or 
existing  debt,  a  fresh  consideration  is  needed  to  bind  the 
accommodation  indorser,  such  as  the  surrender  of  the  ohi 
note  or  of  coHateral  security.'^ 

§  55.  Money  consideration  —  Contemporary  loans, 
future  advances  and  existing  debts  — The  most  common 
consideration  of  contracts  in  general,  and  of  commercial 
l)aper  in  particular,  is  money.  There  can  be  no  doubt  as 
to  the  sufficiency  of  a  money  consideration,  where  the 
money  is  paid  over  simultaneously  with  the  negotiation  or 
delivery  of  the  bill  or  note.^  If  the  promise  to  pay  in  the 
future,  to  make  future  advances  of  goods  or  money,  is  a 
binding  obligation,  the  note  given  or  indorsed  in  considera- 
tion  of  this  promise  is  sup[){)i  ted  by  a  consideration  equal 
in  amount  to  the  advances,  which  the  payee  or  indorsee  has 
bound  himself  to  make,*  A  common  case  of  this  kind  is 
the  deposit  of  a  note  or  bill  with  a  banker,  to  be  discounted 
and  drawn  against.  If  the  right  to  draw  against  it  is  made 
absolute,  it  is  a  sufficient  consideration  to  make  the  bank 
or  banker  a  holder  for  value. ^  But  where  the  obligation 
to  honor  drafts  against  the  amount  of  the  note  or  bill  is 
not  absolute,  the  bank  or  banker  is  a  holder  for  value;  only 
to  the  amount  of  the  drafts  that  had  been  honored,  when 

»  Atlas  Bank  v.  Doyle,  9  R.  I.  7G  (98  Am.  Dec.  3G8;  11  Am.  Rep.  219); 
Gordon  v.  Boppe,  55  N.  Y.  6G5;  Appleton  v.  Donaldson,  3  Pa.  St.  386; 
Washington  Bank  v.  Krura,  15  Iowa,  53;  Buchanan  v.  International  Bank, 
78  111.  500. 

2  Depeau  v.  Waddington,  6  Whart.  220  (36  Am.  Dec.  216);  Smith  v. 
Weston,  88  Ilun,  25;  Nat.  Un.  Bank  v.  Todd,  132  Pa.  St.  312  (19  A.  218). 
But  see  post,  §  50,  for  a  full  discussion  of  the  sufficiency  of  the  consider- 
ation in  the  pledge  of  commercial  paper. 

3  Griswold  v.  Davis,  31  Vt.  390;  Curtis  v.  Mohr,  18  Wis.  645. 

*  Marskey  v.  Turner,  81  Micli.  62  (45  N.  W.  644)  (note  for  an  insur- 
ance premium);  Smith  v.  Gilku,  52  Ark.  442;  12  S.  W.  1073;  (uole  for 
shares  in  a  proposed  mining  corporation). 

6  Bank  of  New  York  v.  Vanderhorst,  32  N.  Y.  553;  Piatt  v.  Beebe,  67 
N.  y.  339;  Dymock  v.  Midland  Nat.  Bank,  67  Mo.  App.  97;  Benton  v. 
Germ. -Am.  Nat.  Bk.,  122  Mo.  332  (26  S.  W.  975);  U.  S.  Nat.  Bk.  v.  Mc- 
Nair,  114  N.  C.  335  (19  S.  E.  361). 

151 


§   55  THE    CONSIDERATION.  [CH.  V. 

the  question   of   bona  fide    ownership  is    raised   and  con- 
tested.^ 

In  respect  to  the  sufficiency  of  a  consideration,  where  it 
consists  of  an  existing  debt ;  it  seems  to  be  well  settled  that 
the  holder  of  a  note  or  bill  made  or  indorsed  to  him,  in  full 
and  absolute  payment  or  satisfaction  of  an  existins:  debt, — 
whether  it  be  the  debt  of  the  maker  or  drawer,  or  indorser, 
or  the  obligation  of  some  third  person,  who  is  a  total 
stranger  to  the  commercial  paper — can  claim  to  be  a 
holder  for  value.  And  where  the  existing  debt  is  in  the 
form  of  an  existing  note  or  bill,  such  note  or  bill  must  be 
surrendered  or  canceled.  In  every  case  where  the  right 
of  action  on  the  existing  debt  is  absolutely  surrendered, 
there  can  be  no  doubt  that  the  new  note  or  bill,  given  or 
indorsed  in  payment  or  renewal  of  the  old  note  or  bill  or 
debt,  is  supported  by  a  sufficient  consideration,  and  makes 
the  payee  or  indorsee  a  holder  for  value. ^  But  if  the 
note  or  bill  is  negotiated  only  as  a  conditional  payment  of 
the  existing  debt,  and  the  creditor  does  not  surrender  his 
cause  of  action  on  the  old  debt,  until  it  can  l)e  ascertained 
whether  the  instrument  taken  in  payment  is  paid  or  not ; 
it  is  held  in  some  of  the  States,  that  the  creditor  is  not  a 
holder  for  value,  and  is  not  protected  ntrainst  the  equitable 
defenses,  from  which  the  bona  fide  holder  for  value  can 

1  Thompson  v.  Sioux  Falls  N.  Bank,  150  U.  S.  231;  McBride  v.  Farm- 
ers' Bank,  26  N.  Y.  450;  Benton  v.  Germ. -Am.  Nat.  Bk.,  122  Mo.  332  (26 
S.  W.  975);  Shawmut  Nat.  Bmk  v.  Manson  (Ma«s.  '07),  47  N.  E.  196. 

2  Piatt  V.  Beebe,  57  N.  Y.  33D ;  Mechanics'  B:nk  v.  Crow,  60  N.  Y.  85; 
Cowing  V.  Altman,  71  N.  Y.  435  (27  Am.  Kep.  70);  Mix  v.  National 
Bank,  91  111.  20  (33  Am.  Rep.  44);  Manning  v.  McClure,  36  111. 
490;  Bromley  o.  Hawley,  60  Vt.  46  (12  A.  220);  Howard  v.  Hinckley, 
&E.  Iron  Co.,  64  Me.  93;  Wooky  v.  Cobb,  165  Mass.  503  (43  N.  E. 
497);  Israel  v.  Gale,  77  Fed.  532;  23  C.  C.  A.  274;  Swift  v.  Tyson,  16 
Pet.  1;  Taylor  V.  Clark  (Tenn.  Ch.  App.),  35  S.  W.  442;  Gates  v.  Union 
Bank,  12  Heisk.  325;  Hobson  v.  Hassott,  76  Cal.  203  (18  P.  320) ;  Brown 
■0.  North,  21  Mo.  528;  Langford  v.  Varuer,  65  Mo.  App.  370;  Lundberg 
V.  N.  W.  Elevator  Co.,  42  Minn.  37  (43  N,  W.  685);  McCabe  v.  Caner, 
68  Mich.  182  (35  N.  W.  901),  The  mere  failure  to  surrender  the  original 
note  docs  not  invalidate  the  renewal.  Murphy  v.  Carey,  89  Hun,  106; 
French  v.  French,  84  Iowa,  655  (51  N.  W.  145).  See  post,  Chapter  XVII. 
On  Payment. 

152 


CII.  V.j  THE    CONSIDERATION.  §   56 

claim  exemption.^  The  negotiation  or  indorsement  of  a 
note  or  bill  under  those  circumstances  differs  little,  if  any, 
from  a  pledge  of  the  n(»lo  or  bill  as  a  collateral  security. 
Under  what  circumstances  a  pledge  is  held  to  be  a  holder 
for  value,  is  explained  in  the  next  section. 

§  5(3.   When  is  a  pledgee  a  bona  fide  holder  for  value. — 

A  bill  or  note  may  of  course  be  the  subject  of  a  pledge,  like 
any  other  kind  of  personal  property.  And  the  rights  of 
the  pledgee  in  the  note,  bill  or  other  commercial  paper, 
are  the  same  as  where  the  subject-matter  of  the  pledge  is 
corporeal.'^  In  fact,  the  subject-matter  of  most  pledges 
given  in  the  transaction  of  the  business  is  commercial 
paper.  The  only  diflSeult  question,  to  be  met  with  in  the 
consideration  of  the  pledge  of  negotiable  instruments,  and 
the  one  vehich  distinguishes  them  from  all  other  kinds  of 
pledges,  is  to  what  extent  and  when  is  a  pledgee  of  a  note 
or  bill  a  boini  Jide  holder.  The  claim  of  the  pledgee  to 
the  character  and  protection  of  a  bona  fide  holder  depends 
upon  the  sufficiency  of  the  consideration  which  supports 
the  pledge.  But  he  is  a  bona  fide  holder  only  to  the  amount 
of  the  debt  for  which  the  pajjcr  is  pledged.'^  No  authority 
is  needed  for  the  proposition  that  the  pledgee  is  a  bona 
fide  holder,  where  he  takes  the  note  or  bill  as  collateral 
security  for  a  contemporaneous  loan,  or  for  future  ad- 
vances. The  difficulty  arises  when  the  pledge  is  given  for 
an  existing  debt.  It  is  probably  safe  to  say  that  the 
majority  of  the  cases  in  this  country  require  proof  in  such 
cases  of  a  fresh  consideration,  in  order  to  make  the 
pledgee  a  hoMer  for  value  ;  although  there  are  some  cases, 
which  either  deny  the  necessity  of  a  fresh  consideration,  or 
claim  the  presence  of  such  consideration  where  other  cases 
would  deny  its  existence. 

1  Phoenix  Ins.  Co.  v.  Church,  81  N  Y.  218  (37  Am.  Rep.  494) ;  Garner 
V.  Coheny  (Ga.),  24  S.  E.  851;  Bank  of  Commerce  v.  Wripht  (Ark. 
'97),  40  S.  W.  81;  Van  Burkleo  v.  S.  W.  Mfg.  Co.  (Tex.  '96),  39  S.  W. 
1085. 

*  See  post,  §        ,  and  Tiedeman  on  Sales,  §  274. 

»  Yellowstone  Nat.  Bank  v.  Gagnon  (Mont.  '97),  48  P.  762. 

153 


§  56  THE    CONSIDERATION.  [CH.   V. 

All  the  cases  seem  to  agree  that  there  is  a  fresh  consid- 
eration, sufficient  to  make  the  pk-dgee  a  bona  Jide  holder 
for  value,  where,  on  receiving  such  pledge,  other  collateral 
security  is  surrendered  ;i  or  where  the  original  debt  is  ma- 
tured, and  the  pledgee  expressly  agrees  to  give  an  extension 
of  time,  whether  he  renews  the  original  obligation  or  only 
promises  to  forbear  to  sue  for  a  given  time.^  On  the  other 
hand,  some  of  the  cases  maintain  that  the  agreement  tov 
an  extension  of  time  nmst  stipulate  some  definite  period  of 
extension;  and  that  there  is  no  fresh  consideration,  where 
the  agreement  not  to  sue  is  indefinite  as  to  time  ;  as,  for 
example,  where  the  cieditor  promises  "  to  allow  the  loan 
to  remain  a  little  longer."  '^ 

To  this  pro[)osition,  however,  other  cases  are  opposed, 
holding  not  only  that  an  indefinite  extension  of  time  is  a 
sufficient  consideration  to  niake  the  pledgee  a  holder  for 
value;  but  also  that  an  agreeuK  nt  for  an  indefinite  exten- 
sion of  time  will  be  im[)lied  in  every  case  of  pledge,  where 
it  is  given  after  maturity;  on  the  ground,  that  the  giv- 
ing of  a  pledge  under  those  circumstances  cannot  be 
rationally  explained  on  any  other  hyi)othcsis  than  that 
both  parties  anticipated  an  extension  of  the  time  of  pay- 
ment, or  at  least  an  indefinite  forbearance  to  sue.  These 
cases  maintain,  therefore,  that  in  every  case,  where  the 
pledge  is  given  alter  maturity  of  the  principal  debt,  there 

1  Mead  17.  Merchants'  Bu  k,  25  N.  Y.  143;  Park  Bank  ».  Watson,  42 
N.  Y.  490  (1  Am.  Rep.  573);  Djkmau  v.  Norihridgo,  3G  N.  Y.  S.  962  ;  1  App. 
Div.  26;  Heath  v.  Silverlhoin  Mining  Co.,  39  Wis.  146;  First  National 
Bank  v.  Bentley,  27  Minn.  87  (3  N.  W.  422);  JNIathias  v.  Kirsch,  87  Me. 
9  (33  A.  19);  Nichul-i  &  Sheppaid  Co.  v.  D.drick,61  Minn.  513  (63  N.  W. 
1110);  Bank  of  Commerce  v.  Wright  (A:k.  '97),  40  S.  W.  81. 

2  Swift  V.  Tyson,  16  Pet.  1;  Goodman  v.  Simonds,  20  IIow.  243; 
Worcester  Nat.  Banku.  Cheney,  87  111.  002;  Mix  v.  Nat.  Bunk  of  Bloom- 
ington,  91  111.  20;  Paulette  v.  Brown,  40  Mo.  52;  Biuk  (  f  Commerce  v. 
Wright  (Ark.  '97),  40  S.  W.  81;  Webster  v.  Ba'nbriclg«',  13  Hun,  180; 
Merchants  and  Farmers'  Bank  z).  Wexson,  42  N.  Y.  438;  A'kinson  v. 
Brooks,  26  Vt.  5G9;  Ho^zworth  v.  Koth,  26  Oliio  St.  33;  Math  as  v. 
Kirsch,  87  Me.  9  (33  A.  19). 

3  Atlantic  Nat.  Bank  v.  Franklin,  5")  N.  Y.  235;  Gates??.  National  Bank. 
100  U.  S.  239;  Lambert -y.  Clewl},  80  Me.  480  (15  A.  61). 

154 


CH.   v.]  THE    CONSIDERATION.  §   56 

i.s  an  implied  agreement  for  an  indefinite  forbearance  to  sue 
the  j)k'dgor,  which  is  a  sufficient  consideration  to  make  the 
pledgee  a  holder  for  value. ^ 

Where  there  is  no  express  or  implied  agreement  for  for- 
bearance, no  surrender  of  other  collaterals  and  no  other 
specific  consideration  for  the  transfer  of  negotiable  instru- 
ments as  collaterals;  it  would  seem,  from  the  study  of  the 
general  subject  of  consideration  in  the  law  of  contracts, 
that  the  indorsee  of  such  instruments  cannot  claim  to  be  a 
holder  for  value.  And  such  is  the  conclusion  of  many,  if 
not  the  majority,  of  the  cases. ^  On  the  other  hand,  there 
is  eminent  authority,  including  the  Supreme  Court  of  the 
United  States,  in  sup|)ort  of  the  proposition  that  every 
pledge,  given  before  or  after  maturity  of  the  principal 
debt,  is  su[)ported  by  a  sufficient  consideration  to  make  the 
pledgee  a  holder  for  value;  implied  from  the  fact,  that  the 
possession  of  the  collateral  lulls  the  creditor  into  security 
and  inactivity,  and  prompts  him  to  show  a  leniency  toward 
the  debtor  pledgor,  which  he  would  not  otherwise  mani- 
fest.^ 

Note.  In  Chapter  X  of  the  author's  treatise  on  Commer- 
cial Paper,  a  very  full  discussion  is  to  be  found  on  the  whole 
subject  of  consideration,  as  it  bears  upon  the  validity  and 

1  Manning  v.  McCluiv,  3G  111.  490;  Worcester  Nat.  Bauk  v.  Cheney,  87 
111.  (!0-';  Thompson  v.  Gray,  03  Me.  228.  But  see  contra,  Moore  v.Iiyder, 
05  N.  Y.  438;  Bowman  v.  Van  Kuren,  2'J  Wis.  209  (19  Am.  R<-p.  55t). 

2  Leslie  v.  Bassetl,  rJ9  N.  Y.  523  (29  N.  E.  834) ;  Oomstock  v.  Hilt,  73 
N.  Y.  209  (29  Am.  R-p.  142);  U.  S.  Nat.  Bk.  v.  Ewingc,  131  N.  Y.  5C0  (30 
N.  E.  601)  ;  Smith  v.  Hogela-  d,  78  Pa.  St.  252;  Union  Nat.  Bank  v.  Bar- 
ber, 66  Iowa,  559  (9  N.  W.  890);  Turle  v.  Sargent,  03  Minn.  211  (05  N. 
W.  349);  Goodman  v.  Simonds,  19  Mo.  100;  Wagner  v.  Simmons,  01  Ala. 
US. 

3  B.  C.  &  N,  R.  R.  Co.  V.  Nat.  Bank  of  Republic,  102  U.  S.  14;  Doe  v. 
N.  W.  Coal  &  Transp.  Co.,  78  Fed.  62;  Stoddard  v.  Kimball,  6  Cush. 
469;  Roxboroughy.  Mossick,  0  Ohio  St.  448  (07  Am.  Die.  340);  Straugiiau 
V.  Fairchild,  80  Ind.  698;  Kaiser  v.  U.  S.  Nit.  Bank  (Gi.  '90),  25  S.  E. 
020;  Buchanan  v.  Mech.niics'  Loan  &  Tr.  Co.,  84  Ml.  430  (35  A.  1099); 
Maitland  v.  Citizens  Nit.  B  i:  k,  40  M.l.  540  (17  Am.  Rep.  020) ;  Rosemond 
V.  Graham,  54  Minn.  323  (50  N.  W.  38)  ;  Jo:.es  v.  Wiesen  (Neb.  '97),  09  N. 
W.  702;  Smith  v.  Wacho'),  179  Pa.  St.  200  (30  A.  221);  Trigg  v.  Saxton 
(Tenii.  Ch.  App.  '90),  37  S.  W.  50''. 

155 


ILL.   CAS.  THE    CONSIDERATION.  [CH,  Y. 

cli a ;acl eristics  of  the  various  kinds  of  Commercial  Paper. 
In  this  book,  the  fixed  limitations  of  space  have  compelled 
the  author  to  be  satisfied  with  the  presentation  of  those 
principles  of  the  law  of  consideration,  which  apply  exclu- 
sively in  determining  the  existence  or  non-existence  of 
ho>ia  fide  ownership  ;  presuming  that  the  student  ha>!,  in 
his  course  on  Contracts,  become  conversant  with  the  sub- 
ject of  consideration  in  general. 


+- 


ILLUSTRATIVE   CASES. 

First  Nat.  Bank  v.  Cecil,  23  Orejj.  58  (32  P.  393). 

Knowles  v.  Knowles,  128  III.  110  (21  N.  E.  196"). 

Kelly  V.  Burron£;h,  102  N.  Y.  93  (G  N.  E.  109). 

Spray  v.  Burke,  123  Ind.  5(J5  (2i  N.  E.  588;. 

Forbearance  to  Sue,  when  Siifiicient  Consideration  for 

Note. 

First  Nat.  Bank  v.  Cecil,  23  Oreg.  58  (32  P.  393). 

Bean,  J.  This  cause  was  originally  f-ubmitted  on  briefs,  with- 
out an  oral  argument,  and,  as  the  brief  of  appellant  was  confined 
largely  to  a  discussion  of  the  points  pnssed  upon  in  the  opinion 
filed,  tlie  alleged  error  of  the  trial  court  in  giving  and  refusing 
certain  instructions,  although  assigned  as  error,  and  noted  in  the 
brief,  escaped  our  attention,  and  was  not  considered.  The  con- 
tention for  appellant  is  that,  alth(>ugh  an  agreement  by  plaintiff 
to  forbear  instituting  proceedin-js  to  set  aside  the  conveyance 
from  F.  Cecil  to  defendant,  and  an  actual  forliearance  by  it, 
would  be  a  good  and  sutlicient  consileration  for  the  execution  cf 
the  note  by  defendant,  and  that  there  was  evidence  from  which 
the  jury  might  find  such  an  agreement,  _\ct  tiiat  question  was  not 
submitted  to  tiie  jury,  but  the  court  i-istructed  them,  in  effect, 
that  mere  forbearance  b}'  plaintiff,  ^^i'.liOllt  an  agreement  to  for- 
bear, would  be  a  suffieii  nt  consideration  for  defendant's  promise. 
The  defendant  requested  the  court  to  cliarge  the  jury  that  "  the 
mere  forbearance  of  plaintiff,  if  you  shoidd  find  that  there  was 
such  forbearance,  to  attack  a  conveycnce  of  property  from  F. 
Cecil  to  the  defendant,  wthout  any  agreement  to  forbear  on  the 
part  of  the  plaintiff,  would  not  be  a  sufficient  consideration  to 
sustain  the  contract  in  question,  even  though  the  plaintiff  did  for- 
bear to  attack  such  conve3'ance  on  account  of  the  defendant 
having  signed  tlie  note  in  question."  This  was  refused  and  the  fol- 
lowing given:  "  If  you  believe  from  the  evidence  that  when  the 
defendant  signed  the  note  sued  u[)on  he  did  so  to  induce  the 
plaintiff  not  to  attack  the  convcj'ance  of  property  theretofore 
made  by  Frank  Cecil  to  himself,  then  I  charge  you  that  there  wr.s 

156 


CH.  v.]  THE    CONSIDERATION.  ILL.  CAS. 

a  good  and  sufficient  consideration  for  bis  so  signing."  From 
tlie  instruction  refused  and  the  one  given  it  is  apparent  the 
theory  of  tlie  trial  c  )urt  was  that  an  agreement  on  the  part  of 
plaintiff  to  forbear  to  attack  tlie  conve3'ance  from  Frank  Cecil  to 
defendant  was  not  necessary  to  support  the  defendant's  promise, 
but,  if  the  note  was  signed  by  defendant  to  indive  plaintiff  to  so 
forbear,  it  was  a  sufHcient  consideralion.  This  was  manifest 
error.  An  agreement  by  a  creditor  to  forbear  prosecnting  his 
claim,  and  an  actual  forbearance  by  him,  is  a  good  consideration 
to  sustain  a  promise  of  a  third  person  to  i)ay  the  claim  (Robin- 
son V.  Gould,  11  Cusli.  55,  and  Bish.  Cont.,  §  03);  but  a  mere 
forbearance,  without  such  ai)romise,  is  not.  "  A  mere  forbear- 
ance to  sue,"  savsBigelow,  J.,  "  without  anj'  promise  or  asfree- 
ment  to  that  effect,  by  the  holder  of  a  note,  forms  no  sufficient 
consideration  for  a  guaranty.  It  is  a  mere  omission  on  the  part 
of  the  creditor  to  exercise  his  legal  right,  to  which  he  is  not  bound 
by  any  promise,  and  whicli  he  may  at  any  moment,  and  at  his 
own  pleasure  enforce."  Mccornoy  v.  Stanley,  8  Cush.  87.  And 
this  is  so  although  the  act  of  f<jrbearance  was  induced  by  the 
defendant's  promise.  ]\Ianter  v.  Cliurchill,  127  Mass.  31.  An 
agreement  to  forbear  may  be  inferred  by  the  jury  from  the  fact 
of  forbearance  and  the  circumstances  under  which  it  was  exer- 
cised, and,  as  we  have  already  held,  there  was  sufficient  evidence 
in  this  case  to  go  to  the  jury  on  that  question  ;  but  whether  there 
was  such  an  agreement  on  the  part  of  the  plaintiff,  either  express 
or  implied,  ought  to  ha\e  been  submitted  to  the  jury.  It  was 
argued  for  the  plaintiff  that  tiie  note  itself  imports  a  considera- 
tion, and,  in  the  a!)3ence  of  any  evidence  on  the  part  of  the 
defendant  showing  a  want  of  consideration,  the  plaintiff  was 
entitled  to  a  verdict,  and  the  error  of  the  court  in  instructing  the 
jury  did  not  prejudice  the  d^^fendant.  But,  as  the  defen<laiit  did 
not  partake  in  the  original  consideration  of  the  note  by  becoming 
ai)arty  to  it  at  its  inception,  the  plaintiff,  in  order  to  recover  against 
him,  was  bound  to  show  a  valid  consideration  for  his  promise ; 
otherwise  it  was  nondura  pac'uin,  and  void.  Wilhotit  a  new  and 
independent  consideration,  the  legal  effect  of  his  signing  the  note 
was  that  he  became  a  p  >rty  t )  an  ol  I  note,  which  had  long  been 
made  and  delivered  to  tlie  payee  as  a  completed  contract  on  a  con- 
sideration wh  Uy  past  and  executed,  and  moving  solely  between 
the  original  makers  a:id  the  plaintiff,  and  not  to  a  new  contract 
on  a  new  and  additional  consideration  a3  between  the  payee  and 
himself.  The  words  "  f  )r  va'ue  received  "  gain  no  new  or  addi- 
tional meaning  by  the  defendant's  signature,  ami  import  no  other 
or  further  consideration  than  that  which  they  signified  when  the 
note  was  given  ;  and,  witluuit  some  proof  of  a  new  consideration, 
plaintiff  cannot  recover,  because  the  complaint  avers  tiiatthe  note 
was  not  signtd  by  defendant  until  long  aft'  r  it  was  delivered  to 
the  plaintiff  by  the  original  promisors.  Green  v.  Shepherd,  5 
Allen,  589.  It  follows,  tiierefore,  that  the  judgment  must  be 
reversed,  and  anew  trial  ordered. 

.  157 


ILL.   CAS.  THE    CONSIDERATION.  [CH.   V. 

Want  of  Consideration,  and  Misrepresentation  as  a 
Defense  to  Note. 

Knowles  V.  Knowles,  128  111.  110  (21  N.  E.  19C). 

Bailey,  J.  This  was  a  suit  iu  assumpsit,  brought  by  Hiram 
Knowles  against  Riley  Kiiowles,  to  recover  the  amount  of  two 
promissory  notes  executed  by  the  defendant  to  the  plaintiff. 
Under  proper  pleadings,  the  defendant  set  up  as  a  defense  want 
of  consideration,  and  also  certain  false  representations,  whereby 
he  was  induced  to  execute  sold  notes  ;  and  a  trial  before  the  court, 
a  jury  being  waived,  resulted  in  a  judgment  in  favor  of  the  plain- 
tiff for  S669  70  and  costs.  This  judgment  was  affirmed  by  the 
appellate  court  on  appeal,  and,  the  judges  of  that  court  having 
certified  that  the  case  involves  questions  of  law  of  such  impor- 
tance, on  account  of  collateral  interests,  that  it  should  be  passed 
upon  by  this  court,  the  record  has  been  brought  here  by  a  further 
appeal. 

The  plaintiff  and  defendant  are  brothers,  and  they,  with  their 
brother  Prettyman  Knowles,  are  tiie  only  surviving  children  of 
Marvel  Knowles,  a  former  resident  of  Gibson  county,  Ind.,  and 
who  died  at  that  place  testate,  July  31,  1883.  In  Apiil,  1883, 
the  defendant  was  indebted  to  his  father  in  the  sum  of  $2,716, 
evidenced  by  three  promissory  notes,  two  of  which  were  secured 
by  a  mortgage  on  the  defendant's  land  in  lUinois.  On  the  24th 
day  of  that  month  the  defendant's  father  surrendered  and  deliv- 
ered said  notes  to  the  defendant,  no  part  of  them  then  being  paid, 
and  executed  to  him  a  release  of  said  mortgage,  and  on  the  second 
day  of  May  following  the  defendant  executed,  under  his  hand  and 
seal,  acknowledged  and  delivered  to  his  father,  an  instrument  in 
which,  in  consideration  of  the  surrender  to  him  of  said  notes,  and 
the  execution  of  said  release, he,  fir  himself  anel  his  heirs,  forever 
relinquished,  surrendered,  and  quitclaimed  all  his  present  and 
prospective  interest,  title,  or  claim  to  any  part  or  portion  of  the 
personal  or  real  estate  of  his  fattier.  The  will  of  Marvel  Knowles 
was  executed  September  9,  1881,  which  was  prior  to  the  execu- 
tion by  the  defendant  of  said  relinquishment  of  his  interest  in  his 
father's  estate.  No  change,  however,  was  made  in  the  will,  and 
after  the  death  of  the  testator  it  was  duly  probated  in  Gibson 
county,  Ind.  The  will  by  its  terms,  after  providing  for  the  pay- 
ment of  the  testator's  debts  anei  certain  specific  bequests,  directed 
that  the  residue  of  his  personal  estate  shoulei  be  equally  divideel 
between  his  three  sons  ;  and  also,  after  giving  a  certain  tract  of 
land  to  a  granddaughter,  devised  the  residue  of  his  real  estate 
in  equal  shares  to  his  three  sous,  the  shares  of  Riley  and  Preity- 
man  to  go  to  them  and  their  heirs  and  assigns  forever,  and  the 
share  of  Hiram  to  go  to  him  during  his  natural  life,  and  at  his 
death  to  his  children.  The  defendant  testifies  that,  at  the  time 
of  the  execution  of  the  instrument  of  May  2,  1883,  he  intended 
to  relinquish  h's  expectancy  in  his  father's  estate,  but  on  exam- 
ination of  the  will,  after  his  father's  death,  he  came  to  the  cou- 

158 


on.  A  .]  THE    CONSIDERATION.  ILL.   CAS. 

elusion  that  he  was  placed  on  the  same  footing  with  his  brothers, 
and  he  thereupon  made  claim  to  one-third  of  the  estate.  After 
some  discussion,  his  brothers  executed  to  him  a  deed  conveying, 
as  was  &up[)Ose(l,  the  undivided  one-third  of  all  the  lands  belong- 
ing to  his  fulhtr's  estate, —  said  deed  being  executed,  according 
to  tliB  recitals  therein  contained,  in  consideration  of  one  dollar, 
"  and  to  comjjromisc  and  settle  all  differences  and  rights  of  action, 
and  sui)posed  rights  of  action,  and  matters  iu  dispute,  between 
the  parlies  hereto."  The  evidence  as  to  the  negotiations  which 
led  to  the  execution  of  tliis  deed  is  very  confused  and  uncertain, 
leaving  it  altogether  in  doubt  as  to  what  controversies  were  in  fact 
taken  into  consideration  by  tlie  parties.  It  is  not  shown  that  the 
defendant  at  that  time  urged  any  claim  beyond  the  right  under 
the  will  to  an  undivided  one-third  interest  in  tlie  lands.  That  he 
subsequently  claimed  the  same  interest  in  the  personal  estate  may 
be  fairly  inferred  from  the  evidence,  although  the  amount  of  the 
personal  estate,  after  the  payment  of  debts  and  specific  legacies, 
is  not  shown. 

Some  time  after  the  execution  of  the  deed  last  mentioned  it 
was  discovered  that  it  did  not  correctly  describe  the  lands  in- 
tended to  be  conveyed,  a  certain  quarter  section  being  therein 
described  as  only  a  40-acre  tract,  and  negotiations  were  there- 
upon set  on  foot  for  the  correction  of  the  deed.  The  matter  of 
such  Correction,  as  well  as  all  other  controversies  with  the  de- 
fendant in  relation  to  their  father's  estate,  was  placed  by  the 
defendant's  brothers  in  the  hands  of  their  attorneys  in  Indiana, 
and  the  defendant  was  referred  by  his  brothers  to  them.  The 
defendant  thereupon  called  upon  said  attorneys,  and  had  an  in- 
terview with  them,  which  lasted  from  4  o'clock  in  the  afternoon 
to  3  o'clock  the  next  morning.  In  that  interview  said  attorneys 
insisted  that  the  tlefendant  was  still  liable  to  the  estate  for  the 
amount  of  the  note  surrendered  by  his  father,  and  that  the  same 
could  be  collected  of  him,  with  interest;  and  that,  if  he  did  not 
pay  or  account  for  the  notes,  he  couhl  not  share  in  the  dislril)U- 
tion  of  his  father's  estate.  The  defendant,  on  the  other  hand,  in- 
sisted that  the  notes  were  canceled,  and  that  he  was  owing  the 
estate  nothing.  As  the  result  of  the  interview,  saia  attorneys 
made  a  proposition,  which  the  defendant  accepted,  that  to  settle 
the  entire  contioversy  the  defendant  should  execute  his  promis- 
sory notes  for  two-tliir<1s  of  the  S2,70U,  one-half  payable  to  each 
of  his  brothers;  and  thereuijon  the  defendant  executed  his  six 
promissory  notes  for  $300  each,  three  payal)le  to  his  brother 
Hiram,  and  three  to  his  brother  Pretlyman.  The  notes  in  suit 
are  two  of  the  notes  executed  to  Hiram.  Soon  afterwards,  and 
in  i)ursuance  of  the  arrangemeni  then  made,  the  defendant  re- 
conveyed  to  his  brothers  the  lauds  conveyed  by  the  deed  contain- 
ing the  erroneous  descrii)tion,  and  a  new  deed  was  (xecuted  to 
him,  by  which  his  brothers  conveyed  to  him  an  undivided  one- 
third  of  said  lands  by  a  correct  description.  That  deed  contained 
the  following  clause:   "  And  it  is  further  agreed  by  the  grantors 

159 


ILL.   CAS.  THE    CONSIDERATION.  [CH.  V. 

herein  that  they,  as  heirs  of  Marvel  Knowles,  do  hereby  release 
the  grantee,  the  said  Riley  Knowles,  from  all  obligations  and  re- 
lease which  the  sai<l  Riley  Knowles  incurred,  and  referred  to  in  a 
certain  release  executed  b}'  him  to  said  Marvel  Knowles  on  the  2d 
day  of  May,  1883." 

It  is  insisted  by  the  defendant  that  in  the  settlement  with  said 
attorneys  he  was  overreached  and  defrauded,  and  also  tbat  the 
notes  then  given,  in  the  view  of  the  previous  settlement  between 
the  parties,  were  wholly  without  consideration.  It  will  readily 
be  seen  from  the  foregoing  statement  that  the  questions  thus 
raised  are  purely  questions  of  fact,  and,  as  all  questions  of  that 
character  have  Ijeen  conclusively  settled  adversely  to  the  defend- 
ant by  the  judgment  of  the  appellate  court,  there  is  nothing  left 
for  us  to  do  but  to  adopt,  the  conclusions  of  that  court. 

The  only  questions  of  law  presented  by  the  record  are  those 
which  arise  upon  the  written  propositions  which  the  defendant 
asked  the  circuit  court  to  hold  as  the  law  in  the  decisions  of  the 
case.  Nine  such  propositions  were  submitted  on  behalf  of  the 
defendant,  the  first  five  of  which  were  marked  "  Held  "  b)'  the 
court.  Of  the  four  propositions  refused,  the  first  and  second  are 
substantially  embodied  in  those  marked  "  HeM."  The  third  and 
fourth  are  simply  to  the  effect  that  under  the  evidence  the  plaintiff 
was  not  entitled  to  recover.  As  the  plaintiff  made  out  his  case 
by  the  production  of  the  promissory  notes  sued  on,  and  as  the 
defenses  urged  were  want  of  consideration,  and  misrepresenta- 
tions by  the  plaintiff's  attorneys,  whereby  the  defendant  was  in- 
duced to  execute  the  notes,  the  adoption  of  those  propositions 
would  have  been  tantamount  to  holding  as  a  matter  of  law  that 
said  defenses,  or  one  of  them,  had  been  conclusively  established. 
The  evidence,  however,  is  by  no  means  so  clear  and  satisfactory 
as  to  necessitate  the  conclusions  contended  for,  but  was  suscepti- 
ble of  constructions  leading  to  conclusions  adverse  to  the  de- 
fenses interposed.  The  questions  presented  were  therefore  ques- 
tions of  fact,  and  not  of  law,  and  it  would  have  been  erroneous 
to  hold  as  a  matter  of  law  that  said  defenses  were  proved.  There 
being  no  error  in  the  record,  the  judgment  of  the  appellate  court 
will  be  aflirmed. 


Accommodation  Indorser  when  Liable  to  Holder.         /^ 

Kelly  V.  Burrough,  102  N.  Y.  93  (6  N.  E.  109). 

Danforth,  J.  The  complaint  states  that  on  the  thirteenth  of 
November,  1881.  one  Evans  made  and  executed  his  promissory 
note,  payable  four  months  after  date  to  the  order  of  the  defend- 
ant for  8G00 ;  that  the  defendant  indorsed  the  note;  that  so 
indorsed,  and  before  maturity,  the  note  was  transferred  to  the 
plaintiff  for  value.  It  alleges  presentment  for  payment,  protest 
and  notice  of  non-payment,  and  that  plaintiff  is  the  owner  of  the 
note.     The  defendant  answered,  but  denied  none  of  the  allega- 

160 


CH.  v.]  THE    CONSIDERATION.  ILL.  CAS. 

tions  of  the  complaint.  He  set  up,  however,  that  his  indorsement 
was  without  consideration,  and  for  accommodation,  and  upon 
information  and  belief,  that  it  had  no  legal  validity  bindinsf  upon 
him  at  all  until  at  or  about  the  time  of  its  date,  when  it  was  dis- 
counted for  and  at  the  plaintiff's  request  at  the  Commercial  Bank, 
and  the  proceeds  paid  to  the  plaintiff.  For  a  second  defense  the 
defendant  alleges  that  the  note  was  paid. 

Upon  the  trial  tlie  plaintiff  put  in  evidence  the  note,  signed  by 
Evans  as  maker,  indorsed  fir^st  by  the  defendant,  aod  second  by 
the  plaintiff.  He  computed  the  interest.  It  is  obvious  that  upon 
the  case  as  it  then  stood  the  plaintiff  had  made  out  his  cause  of 
action.  The  admissions  in  the  pleadings,  the  possession  of  the 
note,  th*?  computation  of  interest,  established  the  right  to  dis- 
cover, and  the  amount  due.  But  he  also  proved  that  the  Com- 
mercial Bank  had  recovered  a  judgment  against  the  maker  and 
himself  upon  the  same  note  ;  that  he  paid  its  amount  to  the  bank, 
and  had  the  judgment  satisfied  as  to  himself.  It  was  proven, 
also,  that  the  note  was  the  property  of  tlie  bank  at  the  time  suit 
was  brought  against  Evans  and  Kell^'.  The  defendant  then  testi- 
fied that  he  indorsed  the  note  at  the  request  and  for  the  accommo- 
dation of  Evans,  the  maker,  and  returned  it  to  him  ;  that  the 
plaintiff  procured  the  note  to  be  discounted,  had  the  money 
placed  to  his  own  credit,  and  on  the  same  day  drew  the  money. 
The  plaintiff  then  testified  that  he  indorsed  the  note  and  procured 
it  to  be  discounted  at  the  request  of  the  maker,  and  gave  the  pro- 
ceeds to  him.  Other  evidence  was  given  to  the  same  effect.  The 
defendant's  counsel  asked  to  go  to  the  jury  upon  the  testimony'. 
The  plaintiff's  counsel  requested  the  couit  to  direct  a  verdict  in 
favor  of  the  plaintiff.  The  court  refused  the  defendant's  request, 
and  directed  a  verdict  in  favor  of  the  plaintiff  for  the  amount 
claimed.  The  defendant  afterwards  made  a  motion  for  a  new 
trial,  which  was  denied.  From  that  order,  and  from  judgment 
upon  the  verdict,  an  appeal  was  taken  to  the  general  term,  where 
the  judgment  was  affirmed.  The  defendant  appeals  from  the 
judgment  of  affirmance  to  this  court. 

We  think  the  appeal  must  fail.  Conceding  that  both  indorsers 
became  so  at  the  request  and  for  the  accommodation  of  the 
maker,  the  defendant  was  still  liable,  as  first  indorser,  to  the 
plaintiff  as  second  indorser,  and  when  the  latter  paid  the  amount 
of  the  note  to  the  bank,  and  took  it  up,  he  became  a  holder  for 
value,  and  entitled  to  indemnity  from  the  defendant.  Concern- 
ing the  facts  there  was  no  dispute,  and  consequently  no  occasion 
to  present  them  to  the  jury.  The  mere  fact  that  the  plaintiff, 
who  testified  to  important  particulars,  was  interested,  was  unitn- 
portant  in  view  of  the  fact  that  there  was  no  conflict  in  the 
evidence,  or  any  thing  or  circumstance  from  which  an  inference 
against  the  fact  testified  to  iiy  him  could  be  drawn.  The  cases 
cited  by  the  appellant  lack  this  element,  while  Lomer  v.  Meeker, 
25  N.  Y.  361,  sustains  the  ruling  of  the  trial  court. 

It  is  claimed,  however,  by  the  appellant,  that  the  plaintiff  was 

11  ItU 


ILL.  CAS.  THE    CONSIDERATION.  [CH.  V. 

improperly  allowed  to  testify  to  the  transaction  between  himself 
and  Evans.  Evans  was  dead,  and  the  contention  is  put  upon 
section  8:^9  of  the  Code.  I  am  unable  to  perceive  that  the 
defendant  is  of  tlie  class  of  persons  protected  by  that  section. 

The  other  exceptions  seem  to  have  neither  substantial  nor 
loclinical  merit.  The  defeii<lant  suffers  from  a  relation  lolhe 
note,  which,  at  the  request  of  Evans  he  voluntarily  assumed,  and 
not  from  any  error  of  the  court  in  enforcing  his  liability.  We  think 
the  judgment  should  be  affirmed. 


Wlien  Void   Note    Cannot   be   Enforced   by   Bona   Fide 

Holder. 

Spray  v.  Burk,  123  Iiid.  565  (24  N.  E.  588;. 

Olds,  J.  This  is  an  action  upon  a  promissory  note  executed 
by  the  appellant  to  one  George  A.  Carter  for  S^o,  and  by  Carter 
assigned  to  the  appellee.  The  appellant  answered  in  three  para- 
graphs: (1)  General  denial ;  (2)  no  consideration  ;  (3)  that  tlie 
note  was  executed  for  a  gambling  debt ;  that  the  said  Carter  won 
from  the  appellant  the  amount  of  the  note  in  a  game  of  cards,  and 
the  appellant  executed  the  note  for  and  in  consideration  of  said 
sura  so  won  at  cards.  The  plaintiff,  appellee,  replied  in  two  par- 
agraphs: (1)  A  general  denial;  and  (2)  an  estoppel;  that  he 
had  no  knowledge  for  what  said  note  was  given,  and  that  before 
he  purchased  the  same  he  informed  the  appellant  that  he  was 
about  to  purchase  tlie  same,  and  appellant  stated  to  him  the  note 
was  all  right,  and  that  it  was  valid  ;  that  he  would  pay  the  same 
as  soon  as  it  would  become  due,  and  directed  the  appellee  to  pur- 
chase the  same;  and  that  appellee,  relying  o;i  the  statements  of 
the  appellant,  and  having  no  knowledge  as  to  what  the  note  was 
given  for,  or  that  it  was  given  for  an  illegal  consideration,  he 
purchased  the  same  for  a  valuable  consideration.  The  cause  was 
submitted  to  a  jury  and  a  trial  had,  resulting  in  a  verdict  for 
appellee  for  the  amount  of  the  note.  Upon  the  trial  of  tlie  cause 
it  was  admitted  that  the  note  was  given  for  money  won  by  Carter, 
the  payee,  from  tlie  appellant  at  a  game  of  cards,  which  sum  so 
won  was  all  tlie  consideration  for  said  not'^,  and  that  the  note  was 
illegal  and  void  unless  the  appellant  was  esopped  from  setting 
up  such  defense  to  s  .id  note  in  the  hau'ls  of  the  appellee.  The 
appellee  and  his  brothers  testified  to  a  conversation  had  between 
appellee  and  appellant  before  the  appellee  purchased  the  note. 
Tliey  testified  that  in  such  conversation  the  appellant  told  the 
appellant  that  the  note  was  all  right,  and  that  he  would  pay  id 
when  due  ;  that  he  thought  the  note  was  all  right  when  he  traded 
for  it.  They  further  testified  as  to  what  other  conversation 
occurred;  that  appellee  was  owing  tlie  appellant  a  debt  ft)r  a 
span  of  mules,  and  could  not  pay  it  then,  and  that  appellee  told 
the  a[>pellant  that  he  could  trade  the  mules  for  the  note  held  by 

1G2 


CH.   v.]  THE    CONSIDERATION.  ILL.   CAS. 

Carter, —  the  note  sued  upon.     They  testified  that  this  conversa- 
tion occurred  at  the  mill  at  Ewing. 

The  foregoing  is  in  brief  all  of  the  testimony  of  said  witness  or 
witnesses  in  behalf  of  the  appellee  in  support  of  his  reply  in 
estoi)pel.  The  appellant  denied  making  any  such  statement  to 
the  appellee  about  tlie  note  in  suit.  The  appellant  and  some  five 
or  more  witnesses  testified  to  at  least  two  conversations  between 
appellant  and  appellee  other  than  the  conversation  testified  to  by 
appellee  at  the  mill,  in  which  appellant  told  appellee  that  the  note 
wasgiven  for  a  gambling  debt,  and  that  he  would  not  pay  it,  and 
that  he  should  not  purchase  or  trade  for  it,  and  if  he  did  he  would 
lose  it.  The  appellant  testified  to  the  two  conversations,  and  was 
corroborated  by  five  witnesses.  Some  testified  to  being  present 
at  one  of  the  conversations  and  some  at  the  other.  Other  wit- 
nesses testified  as  to  admissions  of  appellee,  in  which  he  stated 
that  he  knew  before  he  purchased  the  note  that  it  was  given  for  a 
gambling  debt,  but  that  he  thought  he  could  make  appellant  take 
it  in  payment  of  the  debt  he  owed  the  appellant  for  the  mules, 
and  that  Carter  said  it  was  all  right.  The  conversations  testified 
to  by  appellant's  witnesst-s  were  not  disputed  by  the  appellee, 
nor  did  he  dispute  any  of  the  admissions  that  the  witnesses  testi- 
fied as  to  his  having  made.  From  the  evidence  in  the  record,  all 
that  can  be  claimed  for  it  is  that  it  shows  that  at  one  time  before 
the  purchase  of  the  note  appellant  told  the  appellee  that  the  note 
was  all  right,  and  that  he  won  d  pay  it  when  it  became  due. 
This,  however,  is  disputed,  and  the  undisputed  evidence  shows 
that  upon  two  or  more  occasions  before  appellee  purchased  the 
note  ai)pellant  told  him  what  the  note  was  given  for,  and  that  he 
would  not  pay  it.  By  evidence  undisputed  it  is  shown  that 
appellee  knew  all  about  what  the  note  was  given  for  at  the  time 
he  traded  for  or  purchased  tiie  note.  Ap[)ellee  himself  does  not 
testify  to  the  contrary.  It  is  true  he  says  he  thought  it  was  all 
right,  but  his  admissions,  testified  to  and  not  denied  by  him,  ex- 
plain this  expression,  as  he  states  that  he  knew  the  note  wasgiven 
for  a  gamblinjj  contract,  but  he  thought  it  was  all  right ;  that  lie 
could  make  the  a[)pellant  take  it  on  the  debt  he  was  owing  him 
for  the  mules.  Tue  appellee  does  not  even  stale  in  his  testimoii}' 
that  he  relied  upon  the  statement  of  the  appellant,  and  was  in- 
duced by  such  statement  to  purchase  or  trade  for  the  note,  nor 
does  he  deny  that  he  knew  the  note  was  given  for  such  gambling 
debt  at  the  time  he  purchased  it.  Tlie  appellmt  filed  a  motion 
for  a  new  trial,  which  was  overruled,  and  he  excei^ted,  and  judg- 
ment was  rendered  for  a[)pellee  on  the  verdict.  The  sulficiency 
of  the  evidence  to  support  the  verdict  is  questioned  by  the  motion 
for  new  trial.  The  question  presentid  by  the  evidence  as  to 
whether  or  not  a  note  given  for  a  gambling  debt  is  va  id  and  col- 
lectible in  the  hands  of  an  assignee,  wlio  purchased  the  same  with 
knowledge  that  the  note  was  given  for  such  debt,  but  after  the 
maker  has  stated  to  him  that  the  note  is  all  right,  and  that  he 
will  pay  it    when  due,    but  without   it  appearing  that  the    pur- 

1G3 


ILL.   CAS.  THE    CONSIDERATION.    '  [CH.  V. 

chaser  relied  upon  or  was  deceived  by  such  statement  of  the 
maker.  The  note  in  sui»;  in  this  case  is  not  payable  in  any  bank. 
By  section  4950,  Rev.  St.  1881,  the  note  is  void,  and  the  maker 
may  defend  against  ttie  note,  and  defeat  a  recovery  in  hands  of 
an  assignee,  unless  he  is  estopped  under  the  facts  in  tliis  case. 
The  law  is  pretty  well  settled  tbat,  where  a  statute  declares  that 
a  note  given  for  a  gambling  debt  shall  be  void,  such  note  is 
invalid  in  the  hands  of  a  bona  fide  purchaser,  even  if  such  note  is 
negotiable  in  its  nature,  and  even  if  the  maker  has  induced  the 
assignee  to  purchase  the  same  by  representing  to  such  assignee 
that  the  note  is  valid  before  he  purchases  the  same,  and  he  is 
thereby  induced  to  purchase  the  same  by  reason  of  such  repre- 
sentations of  the  maker.  It  is  dout)tful  whether. the  maker  is 
estopped  from  setting  up  his  defense  to  the  note.  Sondheim  v. 
Gilbert,  117  Ind.  71 ;  18  N.  E.  Rep.  687.  The  note  in  question 
in  this  case  was  void.  It  would  constiiule  no  consideration  for  a 
new  promise.  The  appellee  had  full  knowledge  at  the  time  he 
purchased  the  note  that  the  note  was  given  for  a  gambling  debt ; 
that  the  note  was  void  ;  that  there  was  no  consideration  for  the 
promise  of  the  maker  to  i)ay  the  note.  With  this  knowledge  he 
was  not  deceived.  He  could  not  have  believed  the  note  was 
valid  and  binding  at  the  time  he  purchased  it.  He  had  no  right 
to  rely  upon  a  promise  of  the  maker  to  pay  a  debt  which  he  knew 
was  given  for  a  gambling  debt,  and  was  without  consideration, 
and  he  was  bound  to  know  that  there  was  no  consideration  for 
the  promise.  The  facts  as  shown  by  the  evidence  do  not  consti- 
tute an  estoppel,  even  if  in  such  a  case  as  this  a  party  can  be 
estopped  from  defending  against  the  note.  There  is  no  evidence 
to  support  the  verdict,  and  the  court  erred  in  overruling  the 
motion  for  new  trial,  and  the  judgment  must  be  reversed. 
Judgment  reversed,  at  costs  of  appellee,  with  instructions  to 
the  court  below  to  sustain  the  motion  for  new  trial,  and  for 
further  proceedings  in  accordance  with  this  opinion. 

164 


/ 


CHAPTER     VI. 

ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT  BILLS,  AND  CER- 
TIFICATION OF  NOTES. 

Section  57.  The  object  an-I  effect  of  acceptance. 

58.  When  and  in  what  cases  must  presentment  for  acceptance 

be  made  —  Effect  of  failure. 

59.  Presentment  by  whom  and  to  whom. 

60.  Where  and  at  what  time  must  presentment  be  made. 

61.  Form  and  manner  of  presentment. 

62.  When  presentment  is  waived. 

63.  Who  may  accept. 

64.  Acceptance  before  and  after  completion  of  the  bill. 

65.  Revocation  of  acceptance. 

63.  Acceptances  when  required  to  be  in  writing. 

67.  Form  and  phraseology  of  acceptance. 

68.  Implied  acceptances  —  Detention  or  destruction  of  bill. 

69.  Agreements  to  accept. 

70.  Conditional  acceptances. 

71.  Acceptances  for  honor  or  supra  protest. 

72.  What  acceptance  admits, 

73.  Certified  notes. 

§  57.   The     object    and    effect    of    acceptance.— ^ The. 

accepiancaqf  a  InlLiii-iLiLji^in^enicnt  inado  by  tlio  drawee, 
usuallXJyj'itten  across  the  fiicc  of  Iho  bill,  that  he  will  pay 
the  full  atuount  c;i[lcd  fiir_by:  tho  bill  iiud  according  to  its 
tenor,  and  subject  to  all  the  conditions  and  stipulations 
contained  in  the  bill.)  Until  the  drawee  has  agreed,  by 
such  acceptance  or  au  agreement  to  accept,^  to  honor  the 
bill,  he  is  under  no  obligation  to  pay  it  ;  nor  can  he  be 
sued  on  it  by  the  holder  of  the  bill,  even  though  he  has  in 
his  hands,  to  the  credit  of  the  drawer,  sufficient  lunds  to 
cover  the  amount  of  the  bill.^ 

1  As  to  which  aeepost,  §  C9. 

2  Schimmelpenuich  v.  Bayard,  1  Pet.  264;  Cox  r.  National  Bank,  100 
U.  S.  704;  Bullard  v.  Randall,  1  Gray,  605  (61  Am.  Dec.  433);  Carr  r. 
Nat.  Security  Bank,  107  Mass.  45  (9  Am.  Rep.  6) ;  Tyler  v.  Gould,  48  N. 

1(55 


§   08  ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT,     [CII.  VI. 

The  only  exception  to  this  proposition  is  where  the  cir- 
cumstances permit  of  the  application  of  the  principle,  that 
a  bill  of  exchange  operates  as  an  assignment  of  the  fund 
asruinst  which  it  is  di-awn.^ 

Before  acceptance,  the  drawee  is  so  far  considered  a 
stranger  to  the  bill,  that  he  may  acquire  title  to  the  unac- 
cepted bill  by  indorsement,  and  sue  the  drawee  on  it ;  or 
transfer  it  to  another,  without  incurring  the  liability  of  an 
acceptor. 2  Before  acceptance,  the  drawer  is  the  primary 
debtor;  but  acceptance  makes  the  acceptor  the  primary 
debtor,  and  changes  the  obligation  of  the  drawer  into  a 
secondary  liability;  that  of  an  implied  guaranty,  that  the 
bill  will  be  paid  by  the  acceptor,  if  it  is  presented  for  accept- 
ance and  payment,  according  to  the  tenor  of  the  bill.^  The 
drawer  is  also  under  obligation  to  reimburse  the  acceptor, 
if  the  drawee  has  accepted  for  accommodation  of  the 
drawer.  Or,  if  the  acceptor  is  indebted  to  the  drawer,  he 
debits  the  account  of  the  drawer  with  the  amount  of  the 
bill,  when  he  pays  the  same. 

§  58.  "When  and  in  what  cases  must  presentment  for 
acceptance  he  made  —  Effect  of  failure. —  Bills,  which 
are  payable  on  a  certain  day  in  the  future,  on  demand  or 
on  a  given  time  after  date,  do  not  require  formal  present- 
ment for  acceptance.  They  need  not  be  presented  at  all, 
until  maturity,  when  they  must  be  presented  for  payment.* 

Y.  682;  Smith  v.  Muucie  Nat.  Bauk,  29  lud.  158:  Russell  ?7.  Phillips,  14  Q. 
B.  891;  De  Liquero  v.  Munson,  11  Heisk.  15;  Clements  v.  Yeates,  69  Mo. 
479. 

1  As  to  which,  see  ante,  §  5. 

2  Attenborough  w.  McKenzie,  36  Eng.  L.  &  Eq.  563;  Swopeu.  Ross,  40 
Pa.  St.  186  (80  Am.  D.c.  507);   Desh.i  v.  Stewart,  6  Ala.  852. 

3  Hoffman  v.  Milwaukee  Bk.,  12  Wall.  181 ;  Cos  v.  National  Bauk,  100 
U.  S.  704;  Pomeroy  v.  Tanner,  70  N.  Y.  547;  Jarvis  •?;.  Wilson,  46  Conn. 
90  (33  Am.  Rep.  18);  Marsh  v.  Low,  55  Ind.  271;  Fuller  v.  Leonard,  27 
La.  Ann.  035;  Turner  v.  Browder,  5  Bush,  216. 

4  Bank  of  Washington  v.  Triplet^,  1  Pet.  25,  Bachellor  u.  Priest,  12 
Pick.  399;  Plato  v.  Reynolds,  27  N.  Y.  586;  House  v.  Adams,  48  Pa.  St. 
261;  Walker  v.  Stetson,  19  Ohio  St.  400  (2  Am.  Rep.  405);  Sweet  v. 
Swift,  65  Mich.  90  (31  N.  W.  767)  ;  New  York  Iron  Mine  v.  Citizens'  Bk., 
44  Mich.  344;  6  N.  W.  823;   (post-dated  bill). 

166 


CH.  VI.]    ACCEPTAXCE  AND  AGREEMENTS  TO  ACCEPT.  §   59 

It  is,  however,  customary  in  banking  circles  to  present  for 
acceptance,  within  a  reasonable  tinio,  in  these  cases  as  well 
as  in  those  in  which  Ihc  presentment  is  absolutely  required. 
And  where  such  a  hill  is  received  by  an  agent,  a  bunk,  for 
example,  it  is  necessary  to  present  in  all  cases. ^  But  where 
bills  are  payable  at  .'■ight,  or  a  stated  time  after  sight  or 
demand  ;  since  in  these  cases  the  day  of  payment  and 
maturity  is  dependent  U[)on  the  ascertainment  of  a  certain 
date  of  acceptance,  they  must  be  presented  for  acceptance 
with  reasonable  dispatch. ^ 

Whenever  it  is  the  duty  of  (he  payee  or  holder  of  a  bill 
to  make  presentment  for  acceptance,  and  he  fails  to  do  so 
within  the  prescribed  time,  and  according  to  the  require- 
ments of  the  law,  as  explained  in  succeeding  sections;  he 
not  only  will  lose  his  cause  of  action  on  the  bill,  but  also 
every  collateral  claim  against  the  drawer  and  prior  in- 
dorsers.^  If  acceptance  is  refused,  whether  the  present- 
ment is  made  before  or  within  the  required  time,  the 
holder  must  at  once  protest  it  for  non-acceptance,  if  the 
bill  be  of  the  kind  required  to  be  protested  ;  and  in  any 
case,  he  must  give  prompt  notice  of  dishonor  to  the 
drawer  and  prior  indorsers,  in  oider  to  hold  them  liable  on 
their  implied  guaranty  of  the  honor  of  the  bill.^ 

§  59.  Presentnieiit  by  whom  and  to  whom. —  The  pre- 
sentment for  acceptance  should  be  made  by  the  rightful 
holder  or  by  his  duly  authorized  agent.     But  possession  is 

1  Allen  V.  Suydam,  20  Wend.  321  (32  Am.  Rep.  355). 

2  Cox  V.  National  Bank,  100  U.  S.  704;  Prescott  Bank  «.  Caverly,  7 
Gray,  217  (GG  Am.  Dec.  473);  Fernandez  v.  Lewis,  1  McCord,  321;  Knott 
V.  Venable,  42  Ala.  186;  Craig  v.  Price,  23  Ark.  033;  Phoenix  Ins.  Co. 
t?.  Allen,  11  Mich.  501  (83  Am.  Dec.  756);  Aymar  v.  Beers,  7  Cow.  705 
(17  Am.  Dec.  538)  ;  Lockwood  v.  Crawford,  18  Conn.  3G1.  As  to  what  is 
reasonable  dispatch,  see  jyost,  §  GO. 

3  Smith  V.  Miller,  43  N.  Y.  171  fS  Am.  Rep.  GOO);  s.  c.  52  N.  Y.  546; 
First  Nat.  Bank  v.  Fourth  Nat.  Bank,  77  N.  Y.  320  (33  Am.  Rep.  G18); 
Adams  v.  Darby,  28  Mo.  1G2  (75  Am.  Dec.  115). 

*  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  United  States  v.  Barker, 
4  Wash.  C.  C.  4G4;  Lucas  v.  Ladew,  28  Mo.  342.  As  to  requirements  of 
protest  and  notice,  see  post,  chapters  XI,  XII. 

167 


§  59  ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.     [CH.  VI. 

sufficient  evidence  of  title,  to  enable  an  effective  present- 
ment to  be  made;  and  if  the  one  having  possession  is  not 
the  true  owner,  such  presentment  will  inure  to  the  benefit 
of  the  latter,  if  it  has  been  made  in  the  form  and  manner 
required  by  law.^ 

The  presentment  must  of  course  be  made  to  the  drawee, 
or  to  his  duly  authorized  agent.  If  a  bill  is  drawn  on  two 
or  more  persons,  it  should  be  presented  to  each  one  of  the 
drawees;  unless  the  drawees  are  partners,  when  present- 
ment to  one  of  them  will  be  sufficient. ^ 

Where  the  bill  is  drawn  on  two  or  more  individual  draw- 
ees, the  holder  is  not  obliged  to  take  the  acceptances  of 
any  number  less  than  all;  and  if  he  does  so,  he  releases  the 
drawer  and  indorsers  from  liability,  unless  the  bill  was 
protested  for  non-acceptance  as  to  those  who  had  refused.^ 

In  making  presentment  to  a  supposed  agent,  in  the 
absence  of  the  drawee,  the  value  of  the  presentment  will 
depend  upon  the  express  or  implied  authority  of  the  agent 
to  accept.  And  the  burden  of  proof  is  on  the  holder  to 
show,  that  the  acceptance  was  made  by  a  duly  authorized 
agent.* 

If  the  drawee  is  dead,  there  is  some  authority*  for  hold- 
ing, that  there  should  be  a  presentment  to  his  personal 
representatives.  But,  inasmuch  as  the  personal  representa- 
tives have  no  authority  in  their  representative  capacity  to 
accept,  it  would  seem  to  be  the  better  doctrine  that  the 
bill  may  be  at  once  protested  for  non-acceptance,  without 

1  Freeman  v.  Boynton,  7  Mass.  483;  Bank  of  Utica  v.  Smith,  18 
Johns.  230. 

2  Union  Bank  v.  Willis,  8  Met.  504  (^1  Am.  Dec.  541) ;  Holtz  v. 
Bopple,  37  N.  Y.  634;  Gates  v.  Beecher,  60  N.  Y.  518  (19  Am.  Rep. 
207;  Fourth  Nat.  Bank  v.  Henschen,  52  Mo.  207;  Mt.  Pleasant  Branch 
Bank  v.  McLaran,  26  Iowa,  306. 

3  Greenoueh  v.  Smead,  3  Ohio  St.  416;  Union  Bank  v.  Willis,  8  Met. 
504  (41  Am.  Dec.  541).  By  statute,  it  is  now  provided  in  some  States, 
that  if  one  of  two  or  more  joint  drawees  refuses  to  accept,  the  bill  need 
not  be  presented  to  the  others,  but  may  be  at  once  protested  as  to  all. 

4  Stainback  v.  Bank  of  Va.,  11  Gratt.  260;  Wiseman  v.  Chiappella,  28 
How.  368;  Sharpe  v.  Drew,  9  Ind.  281. 

5  Chitty  and  Story. 

168 


CII.  VI.]  ACCEPTANCE  AND  AGUEEMKNTS  TO  ACCEPT.     §  GO 

making  such  piesentmcnt.  It  is  different,  where  the  drawee 
is  a  firm,  which  has  been  dissolved  by  the  death  of  one  of 
the  partners.  In  such  cases,  presentment  should  be  made 
to  the  surviving  partners,  as  they  are  the  administrators 
of  the  partnership  affairs.^ 

§  60.  Where  ami  at  what  tiiue  must  presentment  be 
made. — The  ])lace  of  presentment  for  acceptance  is  deter- 
mined altogether  independently  of  the  agreed  place  of  pay- 
ment ;  and  it  is  always  where  the  drawee  lives  or  conducts 
his  business.^  There  is  some  tiuthority  for  the  position 
that  the  holder  may,  according  to  his  convenience,  present 
the  bill  at  the  residejice  or  p\;ic(i  of  business  of  the  drawee;^ 
but  this  woidd  not  appear  to  be  a  sound  rule;  especially  in 
the  light  of  the  additional  requirement,  that  presentment 
should  be  made  daring  business  hours.  The  business  man 
cannot  be  expected  to  be  at  home  during  the  business  hours 
of  the  day,  or  have  some  one  at  his  residence  who  is 
authorized  to  acco[)t  bills  for  him.  The  better  rule  would 
appear  to  be,  that  presentment  nmst  be  made  at  the  place 
of  business,  if  the  drawee  has  one,  at  least  during  business 
hours;  and  if  he  has  no  place  of  business,  then  at  his  resi- 
dence. 

If  the  residence  or  place  of  business  of  the  drawee  is 
unknown,  or  it  has  been  changed,  the  holder  must  e.xercise 
reasonable  diligence  in  discovering  it.  But  if  his  reason- 
able  inquiries  fail  to  produce  the  desired  information,  he 
must  tiicn  protest  the  bill  for  non-acceptance,  stating  his 
inability  to  find  the  drawee.^ 

If  the  bill  is  presented  at  the  drawee's  place  of  business, 
it  should  bo  presented  during  what  are  considered  to  be  the 

1  Cayuga  Co.  Bank  v.  Hunt,  2  Hill,  G35. 

-  Mason  v.  Franklin,  3  Johns.  202;  Booth  v.  Franklin,  3  Johns.  207. 
But  if  the  place  of  business  or  residence  is  unknown  presentment  at  the 
place  of  payment  is  sufllcient.     Wolfe  v.  Jewett,  10  La.  .S!)0. 

3  Chitty,  31(5 ;  Daniel,  §  461. 

*  Freeman  v.  Boynton,  7  Mass.  483;  Anderson  v.  Drake,  14  Johns.  114 
(7  Am.  Dec.  447);  Ratcliffe  v.  Planters'  Bank,  2  Sneed.  425;  Wolfe  v. 
Jewett,  10  La.  390;  Hines  u.  AUely,  4  B.  &  Ad.  624. 

169 


§   60  ACCEPTANCE  AND  AGREEMENTS  TO  ACCEl'T.     [CH.  VI. 

ordinary  business  hours,  by  those  engage*.,!  in  that  particular 
business  in  that  particular  place. ^  If  the  bill  is  presented 
at  the  drawee's  residence,  it  may  be  presented  at  any  time 
before  the  customary  hour  for  retiring.^ 

But  the  observance  of  these  requirements,  as  to  time  and 
place,  is  only  of  importance,  where  the  drawee  cannot  be 
found  ;  and  it  is  necessary  to  determine  whether  a  present- 
ment for  acceptance  is  made  to  an  authorized  agent,  or 
whether  due  diligence  has  been  exercised  in  making  the 
presentment,  resulting  in  failure.  If  the  presentment  is 
made  to  the  drawee  in  person,  it  is  a  good  presentment,  it 
matters  not  where  or  at  what  hour  it  was  made. 

It  has  already  been  stated  in  a  preceding  section  ^  that 
when  presentment  for  acceptance  is  required  to  be  made 
before  maturity  of  the  bill,  it  must  be  made  within  a  rea- 
sonable time  after  negotiation  of  the  bill  by  the  drawer. 
What  is  a  reasonable  time  is  held  to  be  a  mixed  question  of 
law  and  fact;  a  question  of  law,  where  the  facts  are  simple 
and  undisputed,  and  a  question  of  fact  for  the  jury,  where 
the  case  is  attended  by  circumstances  which  render  the 
question  doubtful.* 

The  question  is  answered  in  the  light  of  the  facts  of  the 
particular  case.  It  is  probably  true,  that  presentment  for 
acceptance  should  be  made  within  the  customary  twenty- 
four  hours  after  the  payee's  receipt  of  it,  if  the  payee 
retains  the  possession  of  it.  At  any  rate,  it  is  certain  that 
the  same  delay,  which  is  held  to  be  permissible  where  the 
bill  is  indorsed  or  transferred  to  another,  would  in  case  of 
its  retention  by  the  payee  be  held  to  be  unreasonable,  and 
would  discharge  the  drawers.^     But  bills  of  exchange  are 

1  Cayuga  Co.  Bank  v.  Hunt,  2  Hill,  635;  Nelson  v.  Fotterall,  7  Leigh, 
179;  Parker  v.  Gordon,  7  East,  385. 

2  Danau.  Sawyer,  22  Me.  244  (39  Am.  Dec.  674J. 
^  §58. 

^  Prescott  Bank  v.  Caverly,  7  Gray,  217  (66  Am.  Dec.  473);  Lockwood 
V.  Crawford,  18  Conn.  361;  Mohawk  Bank  v.  Broderick,  10  Wend.  304; 
s.  c.  13  Wend.  133  (27  Am.  Dec.  192);  Muncy  School  Board  v.  Com.,  84 
Pa.  St.  464;  Salisbury  v.  Renick,  44  Mo.  554 ;  Walsh  v.  Dart,  23  Wis.  334. 

^  See  Robinson  v.  Ames,  20  Johns.  146  (11  Am.  Dec.  259);  Gowan  v. 
170 


Clil.  VI.]    ACCEPTANCK  AND  AGREEMENTS  TO  ACCEPT.  §   61 

not  required  to  be  presented  for  acceptance,  before  they 
are  indorsed  or  transferred.  They  are  intended  to  cir- 
culate as  a  substitute  for  currency,  and  to  serve  as  a 
medium  of  exchange;  and  as  long  as  the  bill  is  not  sent  to 
some  place  outside  of  the  ordinary  channels  of  commerce, 
it  may  be  passed  from  one  person  to  another,  and  sent 
from  place  to  place,  until  it  reaches  the  place  in  which 
the  drawee  resides  or  does  business.  The  payee  is  not 
obliged  to  send  the  bill  directly  to  the  place  of  business 
01  domicile  of  the  drawee.^  But  the  bill  cannot  circulate 
indefinitely,  without  presentment  for  acceptance.  The  cir- 
culation only  extends  the  time  which  will  be  considered 
reasonable.  And  here  again,  we  find  the  question  of 
reasonable  time  to  be  dependent  upon  the  customs  of  trade, 
and  the  facts  of  each  case.^ 

§  61.  Presentment  —  Form  and  manner. —  No  pre- 
sentment for  acceptance  is  suflScient,  if  the  party  making 
it  has  not  at  least  the  potential  possession  of  the  bill ;  and 
while  it  may  be  doubtful  whether  actual  possession  at  the 
time  of  presentment  may  be  necessary,  it  is  certainly  not 
necessary  to  exhibit  it  to  the  drawee,  unless  he  demands 
an  inspectifm  of  the  bill.^  But  if  the  drawee  demands  the 
production  of  the  bill,  and  is  not  satisfied  with  the  "  pre- 
senter's "  verbal  description  of  it;   the  presentment  is  not 

Jackson,  20  Johns.  17C;  Nat.  Newark  Bkg.  Co.  v.  Second  Nat.  Bk.,  63 
Pa.  St.  404;  Jordan  v.  Wheeler,  20  Tex.  C98;  Richardson  v.  Fenner,  10 
La.  Ann.  599;  Phoenix  Ins.  Co.  v.  Allen,  11  Mich.  501  (83  Am.  Dec.  756); 
Allan  V.  Eldred,  50  Wis.  132  (G  N.  W.  565) ;  Montelius  v.  Charles,  76  111.  303. 
^  Wallace  v.  Agry,  4  Mason,  336;  Prescott  Bank  v.  Caverly,  7  Gray, 
217  (66  Am.  Dec.  473);  Montelius  v.  Charles,  76  111.  303;  Lockwood  v. 
Crawford,  18  Conn.  361 ;  Shute  v.  Robins,  3  C  &  P.  80. 

2  See  Prescott  Bank  v.  Caverly,  7  Gray,  217  (66  Am.  Dec.  47S); 
National  Newark  Banking  Co.  v.  Second  Nat.  Bk.,  63  Pa.  St.  404;  Nichols 
V.  Blackmore,  27  Tex.  580;  Montelius  v.  Charles,  76  111.  303;  Phoenix 
Ins.  Co.  V.  Allen,  11  Mich.  501  (83  Am.  Dec.  756);  s.  c.  13  Mich.  191; 
Walsh  V.  Dart,  23  Wis.  334 ;  Elting  v.  Brinkerhoff,  2  Hall,  459 ;  Olshausen 
V.  Lewis,  1  Bis3.  419.  For  a  fuller  citation  of  authorities  and  illustra- 
tions, see  Tiedeman's  Com.  Paper,  §§  215,  216. 

3  Fisher  v.  Beckwith,  19  Vt.  31  (46  Am.  Dec.  174).  But  see  Fall 
River  Union  Bank  v.  Willard,  5  Met.  216,  apparently  contra. 

171 


§  62     ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.  [CH.  VI. 

good,  unless  the  bill  is  exhibited  for  the  drawee's  exami- 
nation. And  the  drawee  has  the  right,  if  he  demands  it, 
to  retain  possession  of  the  bill  for  twenty-four  hours, 
before  determining  whether  he  will  accept  or  refuse  to 
do  so.i 

If  the  bill  is  executed  in  duplicate  or  triplicate,  either 
part,  but  only  one,  need  be  presented;  and  only  one  part 
must  be  accepted  or  refused  acceptance.  The  drawee  will 
be  liable  to  bona  fide  holders  on  all  parts  of  the  bill,  on 
which  he  writes  his  acceptance. ^ 

§  &'2.  When  presentment  is  waived. —  If  the  drawer 
directs  the  bill  to  be  paid  "  without  acceptance,"  or  the  bill 
contains  in  any  other  form  a  waiver  of  acceptance;  in  such 
cases,  presentment  need  not  be  made  to  hold  the  drawer 
and  indorsers  liable.^  So,  also,  is  there  an  implied  waiver 
of  presentment  for  acceptance,  and  it  may  be  dispensed 
with,  where  the  drawer  and  drawee  are  the  same  person  ; 
whether  he  be  a  natural  person,  a  partnership  or  a  private 
corporation,^ 

Where  the  drawee  is  an  infant,  lunatic,  married  woman, 
or  any  other  person  under  a  legal  disability,  which  makes 
him  or  her  unable  to  make  a  valid  contract  by  acceptance 
of  the  bill ;   the  presentment  may  be  dispensed  with,  and  the 

1  Fall  River  Union  Bank  v.  "Willard,  5  Met.  216]  Overman  v.  Hoboken 
City  Bank,  30  N.  J.  L.  \^2  Vroom)  563 ;  Connelly  v.  McKean,  64  Pa.  St.  113 ; 
Case  V.  Burt,  15  Mich.  82;  Andrews  v.  Germ.  Nat.  Bank,  9  Heisk.  211 
(24  Am.  Rep.  300).  In  many  Status,  statutes  expressly  authorize  the 
drawee  to  retain  possession  of  the  bill  before  giving  his  answer;  usually, 
in  accordance  with  the  customary  rules,  as  just  stated. 

2  Downes  v.  Church,  13  Pet.  205;  Bank  of  Pittsburg  v.  Neal,  22  How. 
96;  Walsh  v.  Blatchley,  6  Wis.  422  (70  Am.  Dec.  4G9). 

3  Webb  V.  Mears,  9  Wright,  222;  Miller  v.  Thompson,  3  M.  &  G.  576; 
Liggett  u.  Weed,  7  Kans.  273. 

•1  Douglass  V.  Cowles,  5  Day,  511;  Cunningham  v.  Wardwell,  12  Me. 
466;  Marion  &c.  R.  R.  Co.  v.  Hodge,  9  lud.  1G3;  Hisey  v.  White  Pidgeon 
Co.,  1  Dougl.  193;  Western  Min.  Co.  v.  Toole  (Ariz.),  11  P.  119;  Capital 
&c.  Ins.  Co.  V.  Quinn,  73  Ala.  588  (on  his  firm).  See  ante,  §  46.  It  is 
otherwise,  where  the  instrument  is  a  municipal  warrant  drawn  by  the 
officer  of  a  municipal  corporation  or  another.  See  Tiedeman  Com.  Paper, 
§138. 

172 


CH.   VI.]    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.  §    63 

bill  [)rotested  for  non-acceptance,  as  soon  as  the  disability 
of  the  drawee  is  discovered.^ 

§  63.  Who  may  accept. —  Except  in  cases  of  acceptances 
for  honor  or  supra  protest,'^  no  one  but  the  person,  who  is 
named  in  the  hill  as  the  drawee,  can  accept  and  be  bound 
as  an  acceptor.  A  stranger  to  the  bill  cannot  bind  him- 
self by  an  acceptance  as  an  acceptor.^  Where,  however, 
the  name  of  the  drawee  is  not  stated  in  the  bill,  one  who 
accepts  the  bill  will  be  presumed  to  l)e  the  intended  drawee, 
and  will  be  bound  by  his  acceptance.* 

A  bill  may  be  drawn  on  two  persons  in  the  alternative, 
when  acceptance  by  one  will  be  sufficient.^  Where  a  bill  is 
drawn  on  two  or  more  drawees,  jointly,  they  must  all 
accept;  and  the  acceptance  of  one  is  not  suflScient,  and  the 
bolder  may  protest  for  non-acceptance,^  although  the  ac- 
ceptance by  one  will  be  binding  upon  him,  unless  it  is  made 
conditionally,  upon  the  acceptance  of  the  bill  by  the  others.' 

But  where  the  bill  is  drawn  on  a  firm,  an  acceptance 
by  a  member  of  the  firm  will  bind  the  firm  if  it  comes 
within  the  scope  of  the  firm's  business;  whether  the  accep- 
tance is  made  in  the  firm's  name,  or  in  the  individual  name 
of  the  partner  who  accepts.^ 

An  agent  may,  if  duly  authorized,  accept  a  bill  drawn  on 
his  principal.  But  the  holder  is  not  obliged  to  take  such 
an  acceptance  ;  and  may  protest  for  non-acceptance,  unless 

1  See  Mellish  v.  Simeon,  2  H.  Bl.  378;  and  anle,  chapter  IV. 

2  As  to  which,  seeposf,  §  71. 

3  Nichols  V.  Diamond,  9  Exch.  157;  Fieder  v.  Marshall,  9  C.  B.  60G; 
Davis  V.  Clark,  G  Q.  B.  IG;  Heenan  v.  Nash,  8  Minn.  407;  May  v.  Ke^ly, 
27  Ala.  497. 

<  Gray  v.  Milner,  8  Taunt.  739;  s.  c.  3  Moore,  91;  Peto  v.  Reynolds,  9 
Exch.  410;  Wheeler  v.  Webster,  1  E.  D.  Smith,  1. 

5  See  ante,  §  13. 

^  See  ante,  §  59 

^  Owen  V.  Van  Uster,  10  C.  B.  31C;  Smith  v.  Milton,  133  Mass.  369. 

8  Lloyd  V.  Rowland,  2  B.  &  Ad.  23;  Markham  v.  Hazen,  48  Ga.  570; 
Tolman  v.  Ilanrahan,  44  Wis.  133;  Gooding  v.  Underwood,  89  Mich.  187 
(50  N.  W.  818).  Where,  however,  the  bill  is  drawn  on  the  individual 
partner,  he  cannot  bind  the  Arm  by  acceptance  in  the  firm's  name. 
Nichols  V.  Diamond,  9  Exch.  157. 

173 


§   64  ACCEPTANCE  AND  AGREEMEiNTS  TO  ACCEPT.     [CH.  VI. 

he  is  supplied  with  undoubted  proof  of  the  authority  of 
the  agent  to  accept.^ 

§  64.  Acceptance  before  and  after  completion  of  bill. — 

The  drawee  ordinarily  accepts  on  presentment  by  the 
holder,  after  the  bill  has  been  fully  executed  and  delivered 
to  the  payee.  But  the  acceptance  may  precede  the  com- 
pletion and  delivery  of  the  bill ;  and  the  blank  acceptance 
may  be  filled  up  by  any  one  who  lawfully  gets  possession 
of  the  bill. 2  And,  as  against  a  honaJiiJe  holder,  the  acceptor 
cannot  set  up  any  defense,  growing  out  of  wrongful  nego- 
tiation or  filling  up  of  blanks.^  The  acceptance  may  also 
be  made  after  maturity  of  the  bill  ;  but  if  the  bill  has  not 
been  protested,  the  acceptance  after  maturity  will  not  bind 
any  one  but  the  acceptor, and  give  him  no  claim  of  indemnity 
against  the  drawee.^  The  holder  may  require  the  drawee 
to  write  the  date  of  acceptance  on  the  bill ;  particularly, 
where  the  bill  is  payable  a  given  time  after  sight  or  de- 
mand, in  order  that  the  actual  day  may  be  ascertained 
without  extraneous  proof  of  the  day  of  acceptance.^  When, 
however,  the  acceptance  bears  no  date,  it  is  presumed  to 
have  been  made  within  a  reasonable  time  after  its  execution, 
and  before  maturity;  but  the  actual  date  of  acceptance 
may,  in  such  cases,  be  proven  by  parol  evidence.^ 

1  Atwood  V.  Mannings,  7  B.  &  C.  278;  1  Man.  &  Ry.  78;  First  Nat. 
Bank  v.   Garside,   53  111.  App.  454, 

2  Carter  v.  White,  L.  R.  25  Ch.  D.  666;  Credit  Co,  v.  Howe  Machine 
Co.,  54  Conn.  357  (8  A.  472);  Moiese  v.  Knapp,  30  Ga.  942;  Hopps  v. 
Savage,  69  Md.  513  (16  A.  133), 

3  Bank  of  Com,  v.  Carey,  2  Dana,  142;  Moody  v.  Threlkeld,  13  Ga.  55; 
Redlick  v.  Doll,  54  N.  Y.  234  (13  Am.  Rep.  573) ;  Montagues.  Perkins,  22 
L.J.  C.  P.  187;  Young  v.  Ward,  21  111.  223. 

*  Exchange  Bank  of  St.  Louis  v.  Rice,  98  Mass.  288;  Williams  v. 
Winans,  13  N.  J.  L.  (2  Green)  339;  Spaulding  v.  Andrews,  48  Pa.  St. 
411;  Bank  of  Louisville  v.  Ellery,  34  Barb.  630. 

5  Dufaur  v.  Oxenden,  1  M.  &  R.  90;  Moore  v.  Willey,  Buller  N.  P,  270, 
The  practice  to  afHx  the  date  is  so  universal,  that  little  opportunity 
has  been  given  to  courts  to  declare  upon  the  right  of  the  holder  to 
demand  it. 

c  Roberts  v.  Bethel,  22  L.  J.  C.  P.  69;  s.  c.  12  C.  B.  778;  Kenner  ». 
Creditors,  1  La.  121. 

174 


CH.  VI.]    ACCEPTANCE  AND  AGUEEMENTS  TO  ACCEPT.  §   66 

Where  an  acceptance  is  written  on  a  blank  or  incomplete 
bill,  and  is  bused  npon  a  valuable  consideration  ;  the  death 
of  the  drawee  before  its  completion  does  not  have  any 
effect  upon  the  liability  of  his  estate  on  the  acceptance; 
nor,  on  the  other  hand,  does  tlie  death  of  the  drawer,  prior 
to  acceptance,  affect  the  drawee's  liability  on  his  subsequent 
acceptance.^  But  it  seems,  that  the  acceptor  has  no  claim 
against  the  drawer,  if  he  accepts  after  he  has  knowledge 
of  the  drawer's  bankruptcy. ^ 

§  65.  Revocation  of  acceptance. —  As  long  as  the  bill 
has  not  been  returned  to  the  holder,  the  acceptance  may  be 
revoked  and  canceled  by  the  drawee.^  Although  it  has 
been  held  that  an  acceptance  may  be  revoked  after  deliv- 
ery, where  there  is  time  to  make  [)rotest  and  to  issue  notices 
of  dishonor;^  the  general  rule  is  that  after  delivery,  the 
acceptance  is  irrevocable,  unless  all  the  parties,  including 
the  drawer  and  indorsers,  consent  to  such  revocation.^  And 
where  verbal  acceptances  are  binding  and  legal,  the  accept- 
ance is  irrevocable,  as  soon  as  it  has  been  conmiunicated  to 
the  holder,  even  though  the  bill  has  not  been  returned  to 
him.®  In  some  States,  it  is  provided  by  statute  that  ac- 
ceptances are  revocable,  as  long  as  the  bill  has  not  been 
transferred  to  a  bona  fide  holder.^ 

§  Q<ii.  Acceptances,  when  required  to  be  in  writing. — 

Acceptances  are  generally  written  across  the  face  of  the  bill ; 

1  Cutts  V.  Perkins,  12  Mass.  20G;  Debesse  v.  Napier,  1  McCord,  106 
(10  Am.  Dec.  G58). 

2  Pinkerton  v.  Marshall,  2  H.  Bl.  334;  Wilkins  v.  Casey,  7  T.  R.  Jll. 

3  Cox  V.  Troy,  5  B.  &  Aid.  474;  Chapman  v.  Cottrel,  34  L.  J.  (n.  s.) 
186;  Lindsay  v.  Price,  33Tex.  280.  The  agreement  to  accept  may  also  be 
revoked,  before  presentment  for  acceptance.  Ilsley  v.  Jones,  12  Gray, 
260;  First  Nat.  Bank  v.  Clark,  81  Md.  400  (48  Am.  Kep.  114). 

•«  Irving  Bank  v.  Wctherald,  3G  N.  Y.  335. 

*  Andresson  v.  First  Nat.  Bank,  1  McCrary,  252;  2  Fed.  122;  North 
Atchison  Bank  v.  Garretson,  51  Fed.  1(58;  Phelps  v.  Borland,  103  N.  Y. 
406  (57  Am.  Rep.  755;  9  N.  E.  307);  Trent  Tile  Co.  v.  Fort  Dearborn  N. 
Bank,  54  N.  J.  L.  33  (23  A.  423);  Ft.  Dearborn  N.  Bk.  v.  Carter,  152 
Mass.  34  (25  N.  E.  27). 

e  Grant  v.  Hunt,  1  C.  B.  44. 

^  Notably,  California. 

175 


§   G7  ACCEPTANCK  AND  AGREEMENTS  TO  ACCEPT.     [CH.   VI. 

and  there  can  be  very  little  doubt  that  the  holder  can  refuse 
any  other  form  of  acceptance,  and  protest  for  non-accept- 
ance. But  it  seems  also  equally  well-settled,  where  statutes 
do  not  provide  to  the  contrary,  that  if  the  holder  is  willing 
to  take  it,  a  verbal  acceptance  will  bind  the  acceptor  to  all 
the  parties  of  the  bill.^  In  some  States,  it  is  held  that  the 
general  provisions  of  the  Statute  of  Frauds,  which  require 
contracts  to  be  in  writing,  apply  to  commercial  paper  of 
every  kind,  and  make  a  verbal  acceptance  invalid. ^  And, 
again,  in  very  many  of  the  States,  it  is  now  provided  by 
statute,  that  acceptances  must  be  in  writing,  and  in  some 
of  them  the  acceptance  is  required  to  be  written  on  the  face 
of  the  bill,  if  the  holder  demands  it.^ 

§  67.   Form    and    phraseology    of    acceptance.  —  The 

acceptance  is  customarily  made  by  writing  across  the  face 
of  the  bill  the  word  "  accepted  "  ;  and  adding  the  signature 
of  the  acceptor  and  the  date  of  acceptance.  But,  except 
where  the  local  statute  requires  it,  neither  the  signature  of 
the  acceptor*  nor  the  date  of  acceptance  is  necessary  ;  nor 
is  it  required  that  the  acceptance  be  across  the  face  of  the 

1  Scudder  v.  Union  Nat.  Bank,  91  U.  S.  406;  Cook  v.  Baldwin,  120 
Mass.  317  (21  Ana.  Rep.  517;;  Donavan  v.  Flynn,  118  Mass.  537;  Arnold 
V.  Sprague,  34  Vt.  402;  Kelley  w.  Greenough,  9  Wash.  659  (38  P.  158); 
Williams  v.  Winans,  13  N.  J.  L.  (2  Green)  339;  Jarvis  v.  Wilson,  46  Conn. 
90  (33  Am.  Rep.  18);  Mull  v.  Bricker,  76  Pa.  St.  255;  St.  Louis  Stock- 
yards V.  O'Reilly,  85  111.  546;  Duncan  v.  Berlin,  60  N.  Y.  151  (check); 
Sprague  v.  Hosmer,  82  N.  Y.  466  (parol  proof  of  acceptance,  when  it  is 
a  collateral  fact);  Miller  v.  Neihaus,  51  Ind.  401;  Laflin  R.  R.  Co.  v. 
Nusheimer,  48  Md.  411  (30  Am.  Rep.  472);  Whilden  v.  Merchants  &c. 
Bank,  64  Ala.  1  (38  Am.  Rep.  1). 

2  See  Plummer  v.  Lyman,  49  Me.  229;  Wakefield  v.  Greenhood,  29  Cal. 
597;  Taylor  v.  Drake,  4  Strobh.  431  (53  Am.  Dec.  680)  ;  Quin  v.  Hanford, 
1  Hill,  82.  For  a  fuller  discussion  of  the  cases,  in  which  this  question  is 
mooted,  seeTiedeman  Com.  Paper,  §  222. 

3  For  a  statement  of  statutory  provisions  in  the  different  States,  see 
Tiedeman  Com.  Paper,  §  222.  See  Weinhauser  v.  Morrison,  49  Hun,  498; 
Hall  V.  Cordell,  142  U.  S.  116  (agreement  to  accept  dispenses  with  a 
written  acceptance) ;  Hall  v.  Flanders,  83  Me.  242  (22  A.  158)  ;  Ulrichw. 
Hower,  156  Pa.  St.  414  (27  A.  243)  ;  Moeser  v.  Schneider,  158  Pa.  412  (27 
A.  1088)  ;  Heberle  v.  O'Day,  61  Mo.  App.  390. 

*  In  many  States  the  local  statutes  do  require  the  signature, 
176 


CH.  VI.]      ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.  §   68 

bill.^  The  acceptance  may  be  written  on  a  separate  piece 
of  paper,  or  in  a  letter. ^  Nor  is  the  word  "accepted" 
absolutely  required.  Any  other  word  or  phrase,  which  by 
reasonable  intendment  can  be  construed  to  show  an  inten- 
tion to  accept,  will  be  sufficient  ;^  and  the  signature  of  the 
drawee  across  the  face  of  the  bill  will  alone  be  a  sufficient 
acceptance.*  But  where  the  words  employed  do  not  indi- 
cate the  intention  to  accept,  they  will  of  course  be  held  to 
be  insufficient.^  In  every  case,  whatever  words  are  used, 
they  must  be  addressed  to  the  payee  or  his  agent.^ 

§  68.  Implied  acceptances  —  Detention  or  destruction 
of  bill. —  The  acceptance  is  held  to  be  implied  from  any 
word  or  conduct  of  the  drawee,  which  is  consistent  with 
the  refusal  of  acceptance.  There  is,  for  example,  an 
implied  acceptance,  where  a  bill  is  drawn  for  the  accommo- 
dation of  the  drawee,  and  he  has  it  discounted  for  his  own 
benefit,  promising  payment  at  maturity.^ 

1  Dufaur  v.  Oxenden,  1  M.  &  M.  90;  Haines  v.  Nance,  52  111.  App. 
406;  Philips  v.  Frost,  29  Me.  79;  State  Bank  v.  Wilkie,  35  Neb.  579  (53 
N.  W.  603). 

2  Germanic  Nat.  Bank  v.  Taaks,  31  Ilun,  260;  Central  Sav.  Bank  v. 
Richards,  109  Mass.  413;  Coffman  v.  Campbell,  87  111.  98  (telegram); 
Sturges  V.  Fourth  Nat.  Bank,  75  111.  595;  Clarke  v.  Gordon,  3  Rich.  311; 
Garretson  v.  North  Atchison  Bank,  47  Fed.  8C7.  In  such  cases,  however, 
it  will  be  an  effective  acceptance,  only  as  to  those  who  take  the  bill  with 
notice,  and  on  the  strength  of  the  acceptance.  Worcester  Bank  v. 
Wells,  8  Met.  107. 

3  Barnet  v.  Smith,  30  N.  H.  256  (64  Am.  Dec.  290)  (seen);  Block  w. 
Wilkinson,  42  Ark.  253  (payment  guaranteed) ;  Ward  v.  Allen,  2  Met. 
63;  35  Am.  Dec.  387  (I  will  pay  the  bill);  Vanstrum  v.  Liljengren,'37 
Minn.  195;  33  N.  W.  555;  (excepted);  Cortelyon  v.  Maben,  22  Neb.  697; 
36  N.  W.  159  (do.). 

*  Wheeler  v.  Webster,  1  E.  D.  Smith,  1 ;  Fowler  v.  Gate  City  N.  Bank, 
88  Ga.  29  (13  S.  E.  831) ;  Kaufman  v.  Barringer,  20  La.  Ann.  419. 

6  Cook  V.  Baldwin,  120  Mass.  317;  21  Am.  Rep.  517  (I  take  notice  of 
the  above)  ;  Rees  v.  Warwick,  2  B.  &  Aid.  113  (the  bill  shall  have  atten- 
tion) ;  First  Nat.  Bank  v.  Whitman,  94  U.  S.  343  (crediting  part  payment 
on  the  bill) ;  Shaver  v.  W.  U.  Tel.  Co.,  57  N.  Y  459  (agreement  to  pay  if 
drawee  remains  in  drawee's  employ,  and  the  order  be  not  revoked) ; 
Martin  v.  Bacon,  2  Mills,  132  (I  will  be  obliged  to  pay  the  bill). 

^  Martin  v.  Bacon,  2  Mills,  132. 

"  Bank  of  Rutland  v.  Woodruff,  34  Vt.  89. 

12  177 


§  69    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.  [CH.  VI. 

It  has  also  been  held  that,  it'  the  drawee  does  not  return 
the  bill  within  twenty-four  hours  after  securing  it,  an  accept- 
ance will  be  implied,  unless  it  is  explained  by  accompany- 
ing circumstances  ;  especially,  where  he  has  on  the  receipt 
of  the  bill  employed  language,  from  which  an  intention  to 
accept  may  be  implied.^  In  many  States,  thia  implication 
of  an  acceptance  is  now  expressly  provided  by  statute.^ 
It  is  also  held,  and  so  provided  by  statute  in  some  of  the 
States,  that  an  acceptance  is  to  be  implied  from  a  willful 
destruction  of  the  bill.^ 

§  ()9.  Ag-reements  to  accept. —  There  seems  to  be  an 
unanimity  of  opinion  on  the  part  of  the  authorities,  that 
where  a  payee  or  indorser,  or  other  subsequent  holder  of  a 
bill,  takes  it  with  notice  of  the  drawee's  executory  agree- 
ment to  accept;  the  bill  will  be  treated  as  if  it  had  been 
formally  accepted,  and  the  drawee  is  liable  as  an  accejDtor  ; 
and  this,  too,  whether  the  bill,  to  which  the  agreement 
referred,  is  in  existence  when  the  promise  to  accept  was 
made,  or  is  executed  subsequently.*     But  in  order  that  the 

1  Hough  V.  Loriug,  24  Pick.  254;  Hull  v.  First  Nat.  Bk.,  133  HI,  234 
(24  N.  E.  546).  But  see  contra,  as  to  simple  retention,  Holbrook  v. 
Payne,  151  Mass.  383  (24  N.  E.  210)  ;  Koch  v.  Howell,  6  Watts  &  S.  350; 
Colorado  Nat.  Bank  v.  Boettcher,  5  Colo.  185  (40  Am.  Rep.  142);  and 
Hall  V.  Steele,  68  111.  231,  where  the  detention  was  by  special  agreement 
between  the  parties. 

2  Matteson  v.  Moulton,  79  N.  Y.  627  (there  must  be  a  demand  for  the 
return  of  the  bill) ;  Dickinson  v.  Marsh,  57  Mo.  App.  566  (detention 
must  be  willful). 

3  Jeune  v.  Ward,  1  B.  &  Aid.  653;  R^usch  v.  Duff,  35  Mo.  312;  Dick- 
inson V.  Marsh,  S7  Mo.  App.  5G6. 

4  Savannah  Nat.  Bank  v.  Haskins,  101  Mass.  370  (3  Am.  Rep.  373) ; 
Johnson  v.  Clark,  39  N.  Y.  216;  Woodard  v.  Griffiths  &c.  Com.  Co.,  43 
Minn.  260  (45  N.  W.  433);  Gates  v.  Parker,  43  Me.  544;  Nimocks  v. 
Woody,  97  N.  C.  1  (2  S.  E.  249);  la  re  Armstrong,  41  Fed.  381;  Boyce 
V.  Edwards,  4  Pet.  Ill;  Crowell  v.  Van  Bibler,  18  La.  Ann.  637;  Valle  v. 
Cerr^,  36  Mo.  575  (88  Am.  Dec.  161);  Lugrue  v.  Woodruff,  28  Ga.  648; 
Steman  v.  Harrison,  42  Pa.  St.  49  (82  Am.  Dec.  491) ;  Brown  v.  Ambler, 
66  Md.  391  (7  A.  903)  ;  Pollock  v.  Helm,  54  Miss.  11  (28  Am.  Rep.  342); 
Sherwin  v.  Bingham,  39  Ohio  St.  137;  Hall  v.  First  Nat.  Bank,  133  111. 
234  (24  N.  E.  540);  Exchange  Bank  v.  Hubbard,  02  Fed.  112;  10  C.  C.  A. 
295.  la  some  cases,  it  has  been  held  that  the  agreement  to  accept  will 
have  the  effect  of  an  acceptance,  although  the  holder  did  not  know  of 

178 


CH.  VI.]    ACCEPTANCE    AND    AGREEMENTS    TO    ACCEPT.         §   70 

actual  acceptance  of  a  [)arLiculai"  bill  may  bo  iinpliecl  from 
a  prior  agreement  to  acce[)t,  it  is  held  that  the  agreement 
must  describe  the  bills  to  be  acce[)ted  particularly  enough,  to 
enable  one  to  ascciiain  from  such  description,  whether  the 
bill  in  question  was  intended  to  fall  within  the  agreement.^ 
Where  the  bill  is  not  yet  executed,  it  is  held  that  it 
must  be  executed  and  negotiated  within  a  reasonable  time, 
after  the  promise  to  accept  has  been  given. ^  If  the  local 
statute  does  not  require  a  writing,  a  verbal  promise  to  ac- 
cept will  be  binding  on  the  drasvce.''^ 

§  70.  Conditional  acceptances. —  The  holder  of  a  bill 
may  reqiiiic  an  nbsoliile  and  unconditional  acceptance,  free 
from  all  conditions,  except  tho.^^e  which  have  been  inserted 
in  the  bill  by  the  drawer.  And  he  may  protest  the  bill  for 
non-acceptance,  if  a  conditional  acceptance  is  offered.* 
The    holder   may  however  take  a  conditional  acceptance  ; 

the  agreement,  whea  he  took  the  bill.  Jones  v.  Council  Bluffs  &c.  Bk.,  34 
111.  313  (85  Am.  Dec.  306)  ;  Read  v.  Marsh,  5  B.  Mon.  10  (41  Am.  Dec. 
253)  ;  W^uno  v.  Raikes,  5  East,  514. 

1  Boyce  v.  Eilwards,  4  Pet.  Ill ;  Maas  r.  Montgomery  Iron  Works,  88 
Ala.  323  (6  So.  701);  Carnegie  v.  Morrison,  2  Met.  381 ;  llsley  v.  Jones, 
12  Gray,  2G0;  Franklin  Bank  v.  Lynch,  52  Md.  279  (3G  Am.  lit  p.  375); 
Atlanta  Nat.  Bank  v.  N.  W.  Fertilizing  Co.,  83  Ga.  35G  (9  S.  E.  671); 
Casscl  V.  Dows,  1  Batch.  335;  Palmer  v.  Rice,  3G  Ntb.  844  (55  N.  W. 
256) ;  Naglce  v.  Lyman,  14  Cal.  451;  Lindley  v.  First  Nat.  Bank,  76  Iowa, 
629  (41  N.  W.  381);  Garretson  v.  North  Atchison  Bank,  47  Fed.  867;  Am. 
Water  Works  v.  Venner,  63  IIuu,  632,  And  there  are  cases,  which  hold 
that  a  general  description  is  suflicleut,  and  that  nicety  or  particularity  of 
descriflion  is  unnecessary.  Baruey  v.  Nrwcomb,  9  Cush.  46;  Bank  of 
Michigan  v.  Ely,  17  Wend.  COS;  Nelson  v.  First  Bank,  48  111.  36  (05  Am'. 
Dec.  510);  Hall  v.  First  Nat.  Bauk,  133  111.  234  (24  N.  E.  546) ;  Bissell  v. 
Lewis,  4  Mich.  450. 

2  Coolidge  V.  Paysou,  2  Wheat.  66;  Boyce  v.  Edwards,  4  Pet.  Ill; 
First  Nat.  Bank  v.  Bensley,  2  Fed.  60!). 

*  Townsky  v.  Sumrall,  2  Pet.  170;  Scudder  v.  Union  Nat.  Bauk,  91  U. 
S.  406;  Spaulding  v.  Andrews,  48  Pa.  St.  411;  Light  t\  Powers,  13  Kan. 
96;  Hall  i'.  Cordell,  142  U.  S.  116.  In  many  States,  however,  the  promise 
is  required  by  statute  to  be  in  writing.  Blakiston  v.  DudU  y,  5  Duer, 
373;  Ni^  liols  v.  Commercial  Buuk,  55  Mo.  A  p.  81  ;  B  iiiknian  r.  Hunter, 
72  M  ..  17J  (39  Am.  Rep.  492).     See  Hall  v.  Cordtll,  142  U.  S.  116. 

*  Shaver  v.  W.  E.  Tel.  Co.,  57  N.  Y.  459;  Ford  v.  Anuelrodt,  37  Mo. 
50  (88  Am.  Dec.  174);  Shackleford  v.  Hooker,  54  Miss.  716. 

I7y 


§    70        ACCEPTANCE    AND    AGREEMENTS    TO    ACCEPT.     [CH.  VI. 

but,  unless  he  i)rocures  the  consent  of  the  drawer  and 
indorsers,  they  will  be  discharged  from  all  liability 
on  the  bill.^  Conditions  may  be  attached  to  verbal 
acceptances,  but  they  must  be  contemporaneous.^  And 
if  the  acceptance  be  wrilten,  the  condition  must  be  in 
writing  and  cannot  be  pioven  by  parol  evidence.^  It  is 
not  an  uncommon  occurrence  for  the  drawee  to  add  to  his 
acceptance  the  provision,  that  the  bill  will  be  payable  at  a 
certain  place,  when  the  bill  itself  does  not  state  any  place 
of  payment.  In  this  country,  it  has  been  held  very  gener- 
ally that  such  an  addition  to  the  obligation  of  the  acceptor 
does  not  make  it  a  conditional  acceptance,  so  as  to  relieve 
the  drawer  and  indorsers  from  liability,  if  the  provision  is 
not  added,  that  the  bill  is  pajable  nowhere  else.* 

Where  a  conditional  acceptance  is  taken  by  the  holder  of 
a  bill ;  in  order  to  hold  the  drawer  and  indorsers  liable,  the 
burden  is  on  such  holder  to  show  that  these  parties,  or  any 
one  of  them,  had  known  of  the  condition,  and  had  given  his 
or  their  consent  to  this  moditicatiou  of  the  acceptance,^  as 
well  as  to  prove  the  perfoimance  of  the  condition.^ 

1  Robinson  v.  Ames,  20  Johns.  14G  (11  Am.  Dec.  259) ;  Wintermute  v. 
Post,  23  N.  J.  L.  (4  Zab.)  420;  Vaublrum  v.  Liljengren,  37  Minn.  191 
(33  N.  W.  555)  ;  Taylor  v.  Newman,  77  Mo.  257;  Savannah  &c.  Ry.  Co.  v. 
Schieffelin,  80  Ga.  57G  (5  S.  E.  781).  But  an  exception  to  this  rule  is 
recognized,  so  far  as  the  drawer  is  concerned,  where  the  condition  is, 
that  the  drawee  has  sufficient  funds  of  the  drawer  to  cover  the  amount 
of  the  bill.  Robinson  v.  Ames,  20  Johns.  146  (11  Am.  Dec.  259)  ;  Wal- 
lace V.  Douglass,  21  S.  E.  387;  IIG  N.  C.  659. 

2  Wells  V.  Brigham,  6  Cush.  6  (52  Am.  Dec.  570). 

3  United  States  v.  Bank  of  Metropolis,  15  Pet.  377;  Meyer  «.  Beards- 
ley,  29  N.  J.  L.  (1  Vroom)  236;  Hunting  v.  Emmert,  55  Md.  265;  Coffman 
V.  Campbell,  87  111.  98;  Foster  v.  Clifford,  44  Wis.  569  (28  Am.  Rep.  603). 

4  Wallace  v.  McConnell,  13  Pet.  136;  Cox  v.  National  Bank,  100  U.  S. 
704;  Troy  City  Banli  v.  Lauman,  19  N.  Y.  477;  Hills  ??.  Place,  48  N.  Y. 
520  (8  Am.  Rep.  568);  Meyer  v.  Croix,  App.  Cas.  £20;  25  Q.  B.  343; 
Yeaton  v.  Berney,  62  111.  61;  Myers  v.  Standart,  11  Ohio  St.  29;  Alden 
V.  Barbour,  3  Ind.  414;  Schoharie  Co.  Nat.  Bk.  v.  Bevaid,  51  Iowa,  257; 
Blair  v.  Bank  of  Tenn.,  11  Humph.  83;  Reeve  u.  Pack,  6  Mich.  240. 

^  Taylor  «.  Newman,  77  Mo.  257;  Robinson  v.  Ames,  20  Johns.  146 
(11  Am.  Dec.  259).     See  Patton  v.  Winter,  1  Taunt.  422. 

6  Kuox  u.  Keeside,  1  Miles,  294;  First  Nat.  Bank  v.  Bensley,  2  Fed. 
609;  Cummings  v.  Hummer,  61  111.  App.  393;  Atkinson  v.  Manks,  1  Cow. 
180 


CH.  VI.]    ACCEPTANCK    AM)    AUUEEMENTS    TO    ACCEPT.         §    7L 

§  71.  Acceptances  for  honor  or  supra  protest. —  It  has 
been  stated  in  a  preceding  section  ^  that,  ordinarily,  no  one 
can  become  liable  on  a  bill  as  an  acceptor  but  the  drawee. 
But  when  the  drawee  or  drawees,  named  in  the  bill,  have 
refused  to  accept,  and  the  bill  has  been  protested  for  non- 
acceptance,  and  the  required  notice  given  to  the  drawer 
and  indorsers  ;  it  is  held  that  any  stranger  may  accept  the 
bill  for  the  honor  of  one  or  more  of  the  parties,  who  arc 
liable  on  the  bill  as  drawer  or  indorsers.  There  can,  how- 
ever, be  no  acceptance  by  such  a  stranger,  until  there  has 
been  a  presentment  to  the  drawee  and  the  bill  has  been 
protested  for  non-acceptance.  This  species  of  acceptance 
is,  for  that  reason,  often  called  an  accepianco  supi^a pi^otest. 
The  acceptance  sujora  'protest  inures  to  the  benefit  of  the 
party,  for  whose  honor  il  has  been  made.  And  there  can  be  as 
many  acceptances  supra  protect  l>y  different  persons,  as 
there  are  parties  to  the  bill,  secondarily  liable.  But  one 
person  may  accept  for  the  honor  of  all  the  parties,  or  for 
any  number  more  than  one.^  The  holder  is  not  required 
to  take  such  an  acceptance  ;  but  if  he  does,  his  cause  of 
action  against  the  persons,  for  whose  honor  the  acceptance 
has  been  given,  will  be  suspended,  until  the  acceptor  for 
honor  has  defaulted.'^  But  the  acceptance  for  honor  is 
conditional.  In  order  to  hold  such  an  accei)t()r  liable,  not 
only  must  there  have  been  a  previous  presentment  to  the 
drawee  and  protest  for  non-acceptance;  but  on  maturity  of 
the  bill,  it  must  again  be  presented  for  payment  to  the 
drawee;  and  if  he  refuses,  it  must  be  protested  for  non- 
payment. When  tliese  conditions  are  complied  with,  the  bill 
should  be  presented  to  the  acce[)tor  for  honor.  And  if  he 
dishonors  the  bill  by  refusal  of  payment,  it  must  be  again 

691;  Williams?;.  Gallyon  (18  So.  1G2),  107  Ala.  439;  Carson  v.  Kerr,  7 
Kan.  243;  Ford  i>.  Angelrodt,  37  Mo.  50  (88  Am.  Dec.  174);  Savanuah 
&c.  Ry.  Co.  V.  Schieffelin,  80  Ga.  5  76(5  S.  E.  781). 

1  §  63. 

-  Konig  V.  Bayard,  I  Pet.  250;  Scbimmelpennich  v.  Bayard,  1  Pet. 
264;  Gazzam  v.  Armstrong,  3  Dana,  554;  Davis  v.  Clark,  6  Q.  B.  16; 
Walton  V.  Williams,  44  Ala.  347;   Markham  v.  Ilazen,  48  Ga.  570. 

3  Williams  v.  G  rmain,  7  li.  &C.  468;  Schofleld  v.  Bayard,  3  Wend.  488. 

181 


§    72        ACCEPTANCE    AND    AGREEMENTS    TO    ACCErr.     [CH.  VI. 

protested  for  non-payment,  in  order  to  hold  the  parties 
liable,  for  whose  honor  the  acceptance  was  given .^  On 
the  other  hand,  if  the  accei)tor  for  honor  pays  the  bill,  he 
will  have  recourse  only  to  those  parties  to  the  bill,  for 
whose  honor  he  accepts;  and  only  when  he  has  notified 
them,  at  the  time  of  bis  acceptance,  that  he  has  accepted 
for  their  honor. '^ 

Since  the  acceptance  for  honor  is  a  conditional  accept- 
ance, no  citation  of  authority  is  needed  in  support  of  the 
statement,  that  the  holder  of  the  bill  is  not  obliged  to  take 
such  an  acceptance,  but  may  proceed  at  once  on  the  bill, 
asrainst  the  drawer  and  indorsers. 

§  72.  What  acceptance  admits  — The  acceptance  is  an 
absolute  promise  to  pay  the  bill,  which  purports  to  have 
been  drawn  on  him  by  the  drawer.  So  that,  while  he 
does  not,  by  acceptance,  admit  the  genuineness  of  the  body 
of  the  bill,  so  that  he  can  defend  a  suit  brought  against 
him  on  his  acceptance,  by  showing  that  there  has  been  a 
material  alteration  in  the  terms  or  amount  of  the  1)111  ; ''  the 
acceptor  does  admit  the  genuineness  of  the  signature  of 
the  drawer,  and  guarantees  the  authority  of  the  agent  of 
the  drawer,  where  the  bill  has  been  drawn  and  signed  by 
an  agent.*     The  acceptor  also  admits  as  against  the  holder 

1  Hoare  v.  Cazenove,  16  East,  391;  Baring  v.  Clark,  19  Pick.  220; 
Schofieldv.  Bayard,  3  Wend.  488;  Wood  v.  Pugh,  7  Ohio,  Pt.  11.,  156; 
Protalonga  v.  Lares,  47  Cal.  378;  Bacclius  v.  Richmond,  5  Yerg.  109. 

2  Cases  cited,  supra. 

3  E!?py  w.  Bank  of  Cincinnati,  18  Wall.  604;  White  v.  Continental  Nat. 
Bank,  64  N.  Y.  316  (21  Am.  Rep.  612).  But  he  is  liable,  if  the  negligence 
of  the  drawer  in  drawing  the  bill  has  enabled  the  holder  to  make  a  suc- 
cessful alteration.  Van  Duzer  v.  Howe,  21  N.  Y.  531;  Young  u.  Leh- 
man, 63  Ala.  519. 

4  Hoffman  v.  Bank  of  Milwaukee,  12  Wall.  181;  Hortsman  v.  Hcn- 
shaw,  11  How.  177;  Nat.  Park  Bk.  v.  Ninth  Nat.  Bk.,  46  N.  Y.  77  (7  Am. 
Rep.  310);  Ellis  v.  Ohio  L.  Ins.  Co.,  4  Ohio  St.  628;  Peoria  &c.  R.  R. 
Co.  V.  Neill,  16  111.  269;  Williams  v.  Drexel,  14  Md.  566.  But  it  is  held 
that,  if  an  agent  has  without  authority  drawn  a  bill  in  the  name  of  his 
principal,  the  acceptor  may  dispute  his  authority  against  the  original 
payee,  and  any  other  but  a  bona  fide  holder.  Agnel  v.  Ellis,  1  Mc- 
Gloin,  57. 

182 


CH.  VI.]    ACCEPTANCE    AND    AGltKEMENTS    TO    ACCEPT.         §    73 

of  the  bill,  but  not  against  the  drawer,^  that  he  has  funds 
of  the  drawer  sufficient  to  cover  the  bill,  and  that  the  drawer 
had  a  right  to  draw ;  ^  that  the  drawer  had  the  legal  capacity 
to  draw  the  bill, ^  as  well  as  the  payee  to  indorse.^ 

But  the  acceptor  does  not  admit  the  genuineness  of  the 
signature  of  the  payee  to  his  indorsement,  even  when  the 
bill  is  payable  to  order  of  the  drawer;  nor  the  authority  of 
the  payee's  alleged  agent  to  iudorise  for  him.® 

These  admissions  are  not  generally  inferred  from  an 
acceptance  for  honor.*" 

§  73.  Certified  notes. —  A  promissory  note  is,  of  course, 
not  susceptible  of  an  ordinary  acceptance.  But  there  is  a 
niore  or  less  general  custom,  where  a  note  is  payable  at  a 
particular  bank,  for  such  bank  to  write  its  name  across 
such  note;  and  such  signature  is  taken  as  a  certificate,  that 
the  maker  has  sufficient  funds  or  credit  to  cover  the  note, 
and  that  the  bank  guarantees  its  payment.^  The  certifica- 
tion of  checks  is  treated  of  in  a  subsequent  chapter.^ 

1  As  to  him  only  prima  fade .     Klopfer  v.  Levi,  33  Mo.  App.  322. 

2  Raborg  V.  Peyton,  2  Wheat.  885;  Hoffman  v.  Bank  of  Milwaukee,  12 
Wall.  181;  Jarvis  v.  Wilson,  46  Conn.  90  (33  Am.  Hep.  18);  Flournoy  u. 
First  Nat.  Bk.,  78  Ga.  222  (2  S.  E.  547);  Gillllan  v.  Meyer.'^,  31  111.  52^; 
Hall  V.  First  Nat.  Bk.,  133  111.  234  (21  N.  E.  540);  Pomeroy  v.  Tanner,  70 
N.  Y.  547;  Beardsley  v.  C'lok,  89  Iliin,  151;  Vanstrum  v.  Liljenaren,  37 
Minn.  191  (33  N.  W.  555)  ;  First  Nal.  Bk.  v.  Moss,  41  La.  Ann.  227  (G  So. 
25). 

3  Braithwaite  v.  Gardiner,  8  Q.  B.  373;  Aspinwall  v.  Wake,  10  Binp. 
51;  Agnel  v.  Ellis,  1  McGloin,  57. 

*  Smith  V.  Marsack,  G  C.  B.  48C;  Peaslee  v.  Rubins,  3  Met.  1G4.  See 
ante,  chapter  IV. 

^  Hortsman  v.  Henshaw,  11  How.  177;  Robinson  v.  Yarrow,  7  Taunt. 
455;  Iloltv.  Ross,  54  N.  Y.  472  (13  Am.  Rep.  615);  White?).  Continen- 
tal Nat.  Bank,  64  N.  Y.  316(21  Am.  R.  p.  612);  Williams  i'.  Drexel,  14 
lud.  5G6. 

^  Tiedeman  Com.  Paper,  §  231. 

'<  Mead  v.  Merchant's  Bank,  25  N.  Y.  148;  Irving  Bank  v.  Wetherall, 
36  N.  Y.  337.  The  latter  case  holds  that  the  bank  may,  notwithstanding 
its  certification  of  the  note,  become  an  indorsee  and  holder  of  such 
note  against  the  maker  and  prior  indorser?!, 

**  See  posi,  chapter  XVI. 

183 


/ 


ILL.  CAS.    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.     [CH.  VI. 


ILLUSTRATIVE  CASES. 

Montelius  v.  Charles,  76  111.  303. 

Sweet  V.  Swift,  65  Mich.  90  (31  N.  W.  767). 

Huertematte  v.  Morris,  101  N.  Y.  63  (4  N.  E.  1). 

Trent  Tile  Co.  v.  Ft.  Dearborn  Nat.  Bank,  54  N.  J.  L.  33  (23  A.  423). 

Bills  Payable  at  Sight  or  a  Certain  Time  after  Sight 
Must  be  Presented  for  Acceptance  within  a  Reasona- 
ble Time  after  Negotiation. 

Montelius  v.  Charles,   76  111.  303. 

Mr.  Justice  Scott.  This  action  was  upon  an  inland  bill  of 
exchange,  in  the  name  of  a  remote  assignee,  against  the  drawers. 
One  important  question  is  whether  the  holders  had  been  guilty  of 
such  laches  before  presenting  it  to  the  drawee  for  payment,  as 
would  bar  a  recovery  against  the  drawers. 

Defendants  were  engaged  in  the  banking  business  at  Piper 
City,  in  this  State.  On  the  8th  day  of  September,  1873,  on 
the  application  of  James  McBiide,  they  drew  their  draft  on 
the  Franklin  Bank  of  Chicago,  jiayable  at  sight,  to  the  order  of 
John  Strank,  who  then  resided  at  Canton  in  Dakota.  It  was  on 
the  same  day  deposited  in  the  post-olfice,  directed  to  the  payee 
at  Canton,  who  received  it  after  some  delay,  attributable  alcne 
to  the  fault  of  the  mails.  Having  passed  through  the  hands  of 
several  holders,  it  was  presented  on  the  13th  day  of  October, 
1873,  to  the  bank  for  payment,  which,  being  refused,  it  was  pro- 
tested and  notice  given  through  the  post  oflice  to  the  drawers  and 
the  several  indorsers.  In  the  meantime  the  Franklin  Bank,  on 
which  the  draft  had  been  drawn,  had  failed  and  gone  into  bank- 
ruptcy. 

The  law  is  settled  by  an  unbroken  line  of  decisions  that  all 
drafts,  whether  foreign  or  inland  bills,  must  be  presented  to  the 
drawee  within  a  reasonable  time,  and  in  case  of  non-payment 
notice  must  be  given  promptly  to  the  drawer,  to  charge  him. 
But  what  is  a  reasonable  time  under  all  the  circumstances  is 
sometimes  a  most  difficult  question.  The  general  doctrine  is  each 
case  must  depend  on  its  own  peculiar  facts,  and  be  judgtjd 
accordingly. 

In  Strong  v.  King,  35  111.  9,  it  was  declared  to  be  a  general 
rule,  the  holder  of  a  sight  draft  must  put  it  in  circulation  or  pre- 
sent it  for  payment,  at  farthest,  on  the  next  business  day  after 
its  reception,  if  within  the  reach  of  the  person  on  whom  it  is 
drawn.  In  the  case  at  bar,  the  draft  was  put  in  circulation,  and 
the  point  is  made,  the  mere  fact  it  was  not  presented  for  pay- 
ment until  after  the  lapse  of  thirty-five  days,  is  per  se  such  laches 
on  the  part  of  the  holders  as  would  discharge  the  drawers. 

In  Muilman  v.  D'Eguino,  2  H.  Black.  565,  Eyre,  C.  J.,  said: 
"  Courts  have  been  very  cautious  in  fixing  any  time  for  an  inland 
bill,  payable  ?it    a  certain   period   after   sight,  to  be   presented 

184 


CH.  VI.J    ACCEPTANCE  AND  AGUEEMENTS  TO  ACCEPT.     ILL.  CAS. 

for  acceptance,  and  it  seems  to  me  more  necessary  to  be 
cautious  with  respect  to  foreign  bills  payable  in  that  manner. 
If,  instead  of  drawing  their  foreign  bills  payable  at  usances 
in  the  old  way,  merchants  choose,  for  their  own  convenience, 
to  draw  them  in  this  manner  and  make  the  time  com- 
mence when  the  holder  pleases,  I  do  not  see  how  the 
courts  can  lay  down  any  precise  rule  on  the  subject.  I  think, 
indeed,  the  holder  is  bound  to  present  the  bill  in  a  reasonable 
time,  in  order  that  the  period  may  commence  from  which  the 
payment  is  to  take  place.  The  question  what  is  a  reasonable 
time,  must  depend  on  the  peculiar  circumstances  of  the  case,  and 
it  must  always  be  for  the  jury  to  determine  whether  laches  is 
imputable  to  the  plaintiff." 

BuLLER,  J.  "  Due  diligence  is  the  only  thing  to  be  looked  at, 
whether  the  bill  be  a  foreign  or  an  inland  one,  and  whether  it  be 
payable  at  sight,  at  so  many  days  after,  or  in  any  other  manner. 
But  here  I  must  observe  that  I  think  a  rule  may  thus  far  be  laid 
down  with  regard  to  all  bills  payable  at  sight,  or  at  a  certain  time 
after  sight,  namely,  that  the}'  ought  to  be  put  in  circulation.  If 
they  are  circulated  the  parties  are  known  to  the  world  and  their 
credit  is  looked  to ;  and  if  a  bill  drawn  at  three  days'  sight  were 
kept  out  in  that  way  for  a  year,  I  cannot  say  there  would  be 
laches.  But  if,  instead  of  putting  it  in  circulation,  the  holder 
were  to  lock  it  up  for  any  length  of  time,  I  should  say  he  was 
guilty  of  laches." 

Bills,  both  inland  and  foreign,  having  the  quality  of  negotiabil- 
ity, are  intended  in  some  degree,  to  be  used  as  a  part  of  the  cir- 
culation of  the  country,  and  are  indispensable  in  the  conduct  of 
extended  commercial  transactions.  They  afford  a  safe  and  con- 
venient mode  of  making  payments  of  indebtedness  between  distant 
points.  Banking  houses  that  for  a  consideration,  issue  such  bills, 
must  be  understood  to  do  so  in  accordance  with  the  known  cus- 
tom of  the  country  —  that  they  will  be  put  in  circulation  for  a 
limited  period.  If  this  were  not  so  their  value  would  be  greatly 
depreciated,  and  their  utility  in  commercial  transactions  would 
be  destroyed.  Were  it  understood  the  purchaser  of  such  a  bill 
was  bound  to  make  all  possible  dispatch  to  present  it  to  the 
drawee  or  lose  his  recourse  on  the  drawer,  no  prudent  man  would 
feel  safe  in  taking  one.  He  may  know  the  drawer  from  whom  he 
purchases  the  bill,  and  be  willing  to  rely  on  his  responsibility,  but 
in  many  instances  he  has  and  can  have  no  knowledge  of  the 
drawer's  correspondent,  the  drawee.  Commercial  usage  has, 
therefore,  placed  the  responsibility  upon  the  drawer,  and  he  is 
presumed,  in  consideration  of  the  premium  paid,  to  assume  all 
risks  as  to  the  solvency  of  the  drawee  for  such  reasonable  time  as 
the  bill  shall  be  kept  in  circulation.  There  can  be  no  doubt,  if 
the  holder  locks  it  up  and  keeps  it  out  of  circulation,  he  assumes 
all  risks,  and  in  case  the  bill  is  dishonored,  his  laches  in  that 
regard  would  bar  a  recovery  against  the  drawer.  Such  bills  are 
not  issued  with  a  view  to  be  held  as  a  permanent  security,  with  a 

185 


ILL.  CAS.    ACCEPTANCE  AND  AGitEEMENTS  TO  ACCEPT.     [CII.  VI. 

continuing  liability  on  the  drawer.     Illustrative  of  the  law  of  this 
branch  of  the  case,  is  Shute  v.  Robbins,  3  C.  &  P.  80. 

The  difficulty  is  to  determine  for  what  length  of  time  such  a 
bill  may  be  kept  in  circulation,  consistently  with  a  continuing 
liability  on  the  drawer.  The  rule  adopted,  as  we  have  seen,  is, 
it  must  be  presented  in  a  reasonable  tim'e  under  all  the  circum- 
stances. But  courts,  not  infrequently,  experience  great  per- 
plexity in  making  a  distinction  between  a  reasonable  time  for  the 
presentation  of  such  paper  and  laches  on  the  part  of  the  holder. 
Every  case  differs  so  essentially  in  its  facts,  it  has  given  rise  to 
many  apparently  contradictory  decisions,  but  through  all  of  them 
is  noticeable  the  efforts  of  the  courts  to  ascertain  whether  the  bill 
was  kept  in  circulation  for  only  a  reasonable  period  in  the  regular 
course  of  business.  When  that  fact  is  once  established  the  lia- 
bility of  the  drawer  is  regarded  as  continuing.  It  will  be  found 
the  decisions  differ  only  in  what  the  various  courts  deemed  rea- 
sonable in  each  particular  case. 

In  Robinson  v.  Ames,  20  Johns.  147,  the  bill  declared  on  was 
drawn  on  the  6th  of  March,  but  not  presented  for  payment  to  the 
drawees  until  the  20th  of  May.  In  the  meantime  the  drawees 
had  failed,  but  in  a  well-reasoned  opinion  the  court  came  to  the 
conclusion  there  was  no  such  laches  as  would  discharge  the 
drawer. 

In  Jordon  v.  Wheeler,  20  Tex.  698,  the  bill  in  suit  was  put  in 
circulation  and  indorsed  by  defendants  without  having  been  pre- 
sented for  acceptance  before  it  fcame  to  the  hands  of  the  plaintiff ; 
that  a  little  more  than  a  month  elapsed  before  he  presented  it  for- 
payment,  and  that  was  declared  to  be  according  to  usage. 

In  Nichols  v.  Blackmore,  27  Tex.  58G,  the  court  was  of  opinion 
a  delay  of  forty-seven  or  forty-eight  days  was  not  such  laches  as 
would  forfeit  the  right  of  the  holder  to  recourse  against  the 
drawer  in  default  of  payment  by  the  drawees. 

Many  other  cases  of  the  same  import  might  be  cited,  but  these 
are  sufficient  for  our  present  purpose.  They  establish,  beyond 
doubt,  the  fact,  there  is  no  fixed  period  in  which  the  bill  must  be 
presented  for  payment,  but  that  each  case  must  be  decided  on  its 
own  peculiar  facts  in  the  light  of  commercial  usage. 

In  the  case  at  bar  the  bill  was  immediately  put  in  circulation. 
It  was  mailed  to  the  payee  on  the  day  it  bore  date,  to  his  proper 
address  in  Dakota.  Some  delay  occurred,  attributable  to  inter- 
ruption in  the  transmission  of  tlie  mails,  but  this  fact  could  not 
be  imputed  to  the  payee  as  laches.  On  the  receipt,  the  payee 
immediately  undertook  and  availed  of  the  first  opportunity  to 
negotiate  the  bill.  It  was  kept  in  circulation,  and  no  delay  was 
suffered  other  than  that  incident  to  the  transaction  of  business  in 
a  sparsely  populated  territory  like  Dakota.  The  facts  and  cir- 
cumstances pi'oven  show  no  laches  on  the  part  of  any  holder  that 
would  operate  to  discharge  tiie  drawers. 

Aside  from  the  presumption  that  will  be  indulged,  the  drawers 
must  have  known  the  bill  was  liable  to  be  put  in  circulation  for  a 

186 


CH.  VI.]    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.     ILL.  CAS. 

limited  period.  The  evidence,  though  conflicting,  warranted  the 
court  in  finding  the  draft  was  sold  with  the  knowledge  that  it  was 
to  be  sent  to  the  payee  in  Dakota.  That  being  so,  on  every  prin- 
ciple of  justice,  waiving  all  considerations  of  commercial  usage, 
defendants  ought  to  be  held  to  have  taken  upon  themselves  the 
risk  of  the  failure  of  the  drawee  for  such  reasonable  time  as  it 
would  take  the  bill  to  go  tliere  and  be  returned  inthe  usual  course 
of  business,  ail  things  considered,  and  to  be  presented  to  the 
drawee  at  Chicago.  We  entertain  no  doubt  their  obligation  is  to 
this  extent.  It  would  be  absurd  to  suppose  it  was  within  the  con- 
templation of  the  drawers  the  bill  was  to  be  sent  directly  to  the 
drawee  at  Chicago  for  payment.  The  law  imposed  no  such  duty 
upon  the  party  procuring  it.  He  could  rightfully  send  it  to  his 
creditor  and  be  guilty  of  no  laches. 

No  error  appearing  in  the  record,  the  judgment  will  be  affirmed. 

Judgment  affirmed. 


No  Acceptance  of  Bill  Payable  on  Demand. 

Sweet  V.  Swift,  G5  Mich.  00  (31  N.  W.  767). 

Campbell,  C.  J.  Plaintiff,  who  is  a  transferee  not  holding  any 
better  title  than  his  assignor,  sued  defendant  on  two  alleged 
acceptances.  One  A.  E.  Jackson,  on  March  1  and  March  12, 
1879,  received  frcjm  Matthias  Kundinger  two  orders,  payable  to 
Jackson  or  bearer,  for  S35.14  and  $1(5. 12,  addressed  to  Swift  & 
Lockwood,  a  firm  of  which  defendant  was  a  member.  They  had 
an  outstanding  contract  with  Kundinger  for  the  delivery  of  logs, 
which  Kundinger  had  not  performed.  Jackson  presented  these 
orders,  which  were  payable  on  demand,  several  times  to  Mr. 
Lockwood,  who  refused  to  honor  them.  In  June,  1897,  Swift  & 
Lockwood  dissolved,  and  Swift  assumed  the  business  and  liabili- 
ties. On  the  18th  of  December,  1897,  Jackson  induced  one 
Norval  Cameron,  an  agent  of  defendant,  to  write  an  acceptance 
upon  them,  with  the  understanding  that  they  should  only  be  pay- 
able if  Kundinger  had  any  credits  at  any  time  to  cover  them, 
which  he  never  had.  Jackson  kept  them  for  awhile,  and 
Cameron  would  not  pay  them.  He  subsequently  turned  them 
over  to  Mr.  Sweet,  the  plaintiff. 

The  plaintiff  insisted  below,  and  insists  here,  that  he  and  his 
assignor,  Mr.  Jackson,  were  bo7ia  fide  holders  of  this  pa))er,  and 
that  the  acceptance  could  not  be  affected  by  testimony  of  the 
circumstances  and  conditions  under  which  it  was  given.  The 
jury  found  for  defendant.  "We  have  no  doubt  the  verdict  was 
warranted.  These  orders,  which  in  form  were  l)ills  of  exchange 
payable  to  bearer  on  demand,  were  given  to  Jackson  in  the  first 
place,  and  held  by  him  until  transferred  to  Sweet.  They  were 
not  subject  to  acceptance,  and  a  demand  could  only  be  made  for 
payment.  This  could  not  be  done  indefinitely,  and,  when  pay- 
ment was  refused,  they  ceased   to  be  binding  on   the  drawer  as 

187 


ILL.  CAS.    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.     [CII.  VI. 

negotiable  paper,  unless  he  was  notified  of  the  dishonor.  No 
such  notice  was  given,  and  the  paper  was  thenceforth  valueless 
in  itself.  Having  ceased  to  bind  Kundinger,  if,  by  putting  his 
name  on  as  acceptor,  defendant  became  a  party  at  all  under  the 
law-merchant  to  paper  culling  for  no  acceptance,  he  became  lia- 
ble as  the  sole  party  liable,  and  his  liability  depended  upon  the 
consideration  on  which  it  was  made.  Jackson  could  not  be  a 
bona  fide  holder  without  notice  of  an  obligation  made  to  him 
directly,  and  upon  negotiations  carried  on  with  him  personally. 
The  jury  have  found,  under  the  charge,  that  the  paper  was  not 
meant  to  be  an  absolute  promise,  and  that,  if  it  was,  there  was 
no  consideration  for  it.  This  was  fairly  left  to  the  jury.  There 
was  also  no  testimony  tending  to  show  that  Cameron,  who  was 
defendant's  general  business  agent,  had  any  power  to  bind  him 
to  an  accommodation  promise,  without  any  consideration.  The 
case  is  one  involving  no  legal  difficulties,  and  there  is  no  founda- 
tion for  the  contention  that  it  is  merely  an  attempt  to  change  a 
written  contract  by  parol.  The  question  of  consideration  is 
entirely  different  from  that,  and  the  dealings  were  with  Jackson 
himself,  who  was  the  promisee,  if  such  an  acceptance  of  dishon- 
ored paper  not  calling  for  acceptance,  but  only  for  payment,  can 
be  called  a  negotiable  promise,  which  is  a  question  we  need  not 
discuss. 

The  judgment  must  be  affirmed,  with  costs. 

The  other  justices  concurred. 


No    Consideration    Necessary    Between    Acceptor    and 
Holder  —  False  Representations  by  Drawer. 

Huertematte  v.  Morris,  101  N.  Y,  C3  (-1  N.  E.  1). 

EuGER,  C.  J.  In  the  discussion  of  this  case  it  is  unnecessary 
to  consider  particularly  the  agency  of  Hourquet  &  Poylo  in  the 
transaction, as  they  acted  solely  as  the  gratuitous  agents  of  the  plain- 
tiffs, and  had  no  interest  in  the  subject  of  the  business.  It  may 
therefore  be  treated  as  a  transaction  occurring  directly  betweiiu 
the  plaintiffs  and  Rau  Runnels,  and,  concisely  described,  was  to 
the  following  effect:  The  plaintiffs  were  merchants  doing  bus- 
iness at  Panama,  and  one  Christofel  was  a  customer  and  debtor 
of  theirs,  residing  at  San  Juan  del  Sur,  near  Rivas,  in  the  State  of 
Nicaragua.  Christofel  was  desirous  of  discharging  his  obligations 
to  the  plaintiffs,  l)ut  was  embarrassed  in  doing  so  by  the  inf  requen<;y 
of  communication  between  Rivas  and  Panama,  and  the  want  of  a 
system  of  exchange  enabling  him  to  transmit  funds  safely  and  expe- 
ditiously from  one  place  to  the  other.  Under  these  circumstances, 
the  plaintiffs  consulted  Hourquet  &  Poylo,  a  business  firm  at 
Panama,  as  to  the  best  manner  of  collecting  the  debt.  The  plain- 
tiffs were  informed  by  Hourquet  &  Poylo  that  Rau  Runnels  was  a 
correspondent  of  theirs  residing  at  Rivas,  and  that  the  collection 

188 


CH    VI.]    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.    ILL.  CAS. 

could  probably  be  made  through  him,  and  offered  to  transmit  a 
draft  on  Christofel  to  Runnels  for  that  purpose.  Thereupon  the 
plaintiffs  made  their  draft  on  Christofel  at  60  days  for  Si, 000, 
payable  to  Hourqiiet  «fe  Poylo,  who  indorsed  the  same  to  Runnels, 
and  forwarded  it  to  him  at  Rivas  for  collection.  In  due  time  it 
was  received  by  Runnels,  and  at  its  maturity  was  paid  to  him  in 
Colombian  currency. 

It  becomes  important  now  to  determine  the  legal  obligations 
and  duties  of  the  parties  toward  each  other  at  this  stage  of  the 
transaction.  In  the  collection  of  tlie  draft.  Runnels  acted  as  the 
mere  agent  of  the  plaintiffs,  and  had  no  interest  in  the  proceeds, 
except,  perhaps,  a  lien  thereon  for  the  value  of  his  services  in 
making  the  collection.  He  had  no  right  or  authority  to  use  such 
funds  for  his  individual  purposes,  and  his  sole  duty  in  relation  to 
them  was  that  of  their  transmission  to  his  principals.  The  nature 
of  the  business  impliedly  authorized  him  to  make  such  transmis- 
sion according  to  the  usages  in  trade,  and,  in  the  absence  of  such 
usages,  to  do  so  by  some  other  method  which  should,  in  the 
exercise  of  reasonable  care  and  prudence,  promise  to  accomplish 
the  object  intended.  It  was  therefore  open  to  him  to  transmit 
the  funds  received  in  specie  as  they  were  collected ;  or  he  could 
have  purchased  a  bill  of  exchange,  if  opportunity  served,  at 
at  that  place,  and  transmitted  that;  or  he  could  remit  them 
in  any  other  way  deemeil  most  safe,  convenient,  and  desira- 
ble to  him,  subject  to  the  approval  by  his  principles  of 
the  method  adopted.  It  does  not  apper  in  the  case  but 
that  Runnels  was  a  merchant  or  banker,  and  accustomed 
to  sell  exchange  upon  foreign  places.  However  that  may 
be,  he  in  fact  sent  to  the  plaintiffs,  February  4,  1879,  imme- 
diately upon  collection,  the  proceeds  thereof,  less  cost  of 
collection  and  exchange  ou  the  draft  in  suit.  This  was  his  own 
draft  upon  the  defendant,  Morris,  at  New  York,  at  90  daj's' 
sight.  Upon  the  receipt  of  this  draft  by  the  plaintiffs,  it  was 
accepted  by  them,  and  remitted  to  New  York  for  presentation  to 
and  acceptance  by  the  drawee,  and  the  same  was  accepted  by  him 
February  26,  1879. 

The  sole  question  in  the  case  is  whether  the  plaintiffs  were 
bona  fide  holders  for  value  of  the  draft.  We  cannot  doubt  but 
that  they  were.  If,  on  receiving  the  funds  in  question.  Runnels 
had  purchased  with  them  a  bill  of  exchange  or  draft  from  a  mer- 
chant or  banker,  according  to  the  usages  of  trade,  and  trans- 
mitted the  same  to  the  plaintiffs,  no  question  could  arise  but 
that  he  acted  as  their  agent  in  the  transaction,  and  thoy  would 
have  been  bona  lide  holders  of  such  paper  within  all  definitions 
of  that  character;  and  we  are  unable  to  see  the  difference  in 
principle  between  such  a  case  and  the  transaction  in  question. 
The  funds  collected  by  Runnels  were,  until  they  consented  to 
their  appropriation  by  him,  at  all  times  the  properly  of  the  plain- 
tiffs. Runnels'  sole  duty  in  relation  to  them  was  that  of 
transmission  to  the  plaintiffs,  and  until  that  duty  was  legally  per- 

189 


ILL.  CAS.  ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.  [cH  VI. 

formed  he  held  them  in  a  fiduciary  capacity  for  a  specified  pur- 
pose. His  duty  of  transmission  could  not  be  performed  by  remit- 
ting his  own  obligation,  payable  at  a  future  day,  except  by  the 
consent  and  approval  of  the  plaintiffs.  Until  this  consent  and 
approval  were  given,  the  funds  remained  the  property  of  the 
plaintiffs,  and  any  use  of  them  by  Runnels  before  that  time 
would  have  constituted  a  violation  of  his  duty  to  his  principals, 
which  it  cannot  be  presumed  he  committed. 

Doubtless  the  lack  of  adequate  facilities  of  exchange  between 
Rivas  and  Panama  induced  Runneh  to  offer,  and  the  plaintiffs  to 
accept,  the  mode  of  remittance  adopted  ;  and  it  was  entirely  com- 
petent for  Runnels  to  propose,  and  for  the  plaintiffs  to  accept, 
such  a  solution  of  the  inconveniences  of  the  situation;  but  no 
title  to  the  funds  collected  passed  to  Runnels  until  the  acceptance 
of  the  draft  by  the  plaintiffs.  After  that,  and  not  till  then,  he 
was  entitled  to  use  those  funds  as  his  own.  By  the  original 
employment  the  plaintiffs  contemplated  no  credit  to  Runnels, 
and  he  had  no  right  to,  and  it  does  not  appear  that  he  even  sup- 
posed he  acquired  any  riglit  to,  use  the  funds  in  question  for  his 
own  purposes,  or  that  he  ever  did  so  use  tiiem.  The  conventional 
relation  of  debtor  and  creditor  never  existed  between  Runnels 
and  the  plaintiffs  until  the  acceptance  of  his  draft  upon  Morris, 
and  then  those  relations  were  governed  by  the  liabilities  existing 
by  force  of  the  draft  alone.  In  accordance  with  the  rule  which 
precludes  a  court  from  presuming  a  viola.tion  of  duly  by  an  indi- 
vidual, we  must  assume  that  Runnels  performed  his  duty,  and  his 
whole  duty,  to  the  plaintiffs  as  their  agent.  This  required  him  to 
safely  keep  their  funds  until  he  had  transmitted  them  according 
to  the  usage  of  trade,  or  in  some  other  mode  approved  by  them. 
The  legal  effect  of  the  method  adopted  was  to  transfer  the  title  to 
the  funds  collected  to  Runnels  simultaneously  with  the  acceptance 
by  the  plaintiffs  of  Runnels'  draft  upon  Morris,  and  was  the  pre- 
cise equivalent  of  the  payment  of  so  much  money  in  the  immediate 
purchase  of  a  draft  or  bill  of  exception  by  one  person  from  another. 
We  are  therefore  of  the  opinion  that  the  plaintiffs  were  the  bona 
fide  holders  for  value  of  the  draft  in  suit,  and  are  entitled  to 
recover  thereon. 

The  general  term  conceded  that  the  plaintiffs  were  bona  fide 
holders,  for  value,  of  the  bill  before  acceptance,  but  deny  them 
that  character  after  acceptance,  as  against  the  acceptor.  We 
think  the  concession  is  fatal  to  the  conclusion  reached  by  that 
court.  It  is  said  that  tlie  Farmers'  &  Mechanics'  Bank^;.  Empire 
8tone  Dressing  Co.,  5  Bosw.  290,  is  authority  for  the  position. 
It  is  true  that  some  expressions  of  the  learned  judge  writing  in 
that  case  may  justify  the  citation,  yet  it  should  be  considered  that 
those  remarks  were  unnecessary  to  the  decision  of  the  case  ;  and  the 
same  court  have  twice  since  then  refused  to  follow  it.  We  conceive 
the  rule  there  laid  down  finds  no  support  in  the  doctrines  of  the 
text-writers  or  the  reported  cases.  Philhriek  v.  Dallett,  2  Jones  & 
S.  370 ;  First  Nat.  Bank  of  Portland  v.  Schuvler,  7  Jones  &  S. 
190 


CH.  VI.]  ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.  ILL.  CAS. 

440 ;  Pars.  Bills  &  Notes,  323 ;  Daniels,  §  534 ;  Edw.  Bills  (2d 
Ed.),  410. 

If  a  party  becomes  a  bona  fide  holder  for  value  of  a  bill  before 
its  acceptance,  it  is  not  essential  to  his  riglit  to  enforce  It  against 
a  subsequent  acceptor  that  an  additional  consideration  should  pro- 
ceed from  liiin  to  the  drawee.  The  bill  itself  implies  a  repre- 
sentation by  the  drawer  that  the  drawee  is  already  in  receipt  of 
funds  to  pay,  and  his  contract  is  that  the  drawee  shall  accept 
and  pay  according  to  the  terms  of  the  draft.  1  Pars.  Bills  & 
Notes,  323,  544;  Arpin  v.  Chapin  (Mass.),  3  N.  E.  Rep.  25. 
The  drawee  can,  of  course,  upon  presentment,  refuse  to  accept  a 
bill,  and  in  that  event  the  only  recourse  of  the  holder  is  against 
the  prior  parties  thereto  ;  but  in  case  the  drawee  does  accept  such 
a  bill,  he  becomes  primaii'y  liable  for  its  payment,  not  only  to 
its  indorsers,  but  also  to  the  drawer  himself.  The  delivery  of  a 
bill  or  check  by  one  person  to  another,  for  value,  implies  a  repre- 
sentation on  the  part  of  the  drawer  that  the  drawee  is  iu  funds 
for  its  payment,  and  his  subsequent  acceptance  of  such  check  or 
bill  constitutes  an  admission  of  the  truth  of  the  representation 
which  he  is  not  allowed  to  retract.  Daniels  Neg.  Inst.  534 ; 
Pars.  Bills  &  Notes,  323,  544,  545.  By  such  acceptance  the 
drawer  admits  the  truth  of  the  representation,  and  having  obtained 
a  suspension  of  the  holder's  remedies  against  the  drawer,  and  an 
extension  of  credit  by  his  admission,  is  not  afterwards  at  liberty 
to  controvert  the  fact  as  against  a  bona  fide  holder  for  value  of 
the  bill.  The  payment  to  the  drawer  of  the  purchase  price  fur- 
nishes a  good  consideration  for  the  acceptance  which  he  then 
undertakes  shall  be  made,  and  its  subsequent  performance  by  the 
drawee  is  only  the  fulfillment  of  the  contract  which  the  drawer  im- 
pliedly represents  that  he  is  authorized  by  the  drawee  to  make.  The 
rule  that  it  is  not  competent  for  an  acceptor  to  allege  as  a  defense  to 
an  action  on  a  bill  that  it  was  done  without  consideration,  or  for 
accommodation,  as  against  a  bona  fide  holder  for  value  of  such 
paper,  fl^ws  logically  from  the  conclusive  force  given  to  his  admis- 
sion of  funds,  and  is  elementarv.  Daniels  Neg.  Inst.,  §§  532- 
534;  Edw.  Bdls,  410;  Harper  v.  Worrall.  69  N.  Y.  371;  Com- 
mercial Bank  of  Loke  Va'\q  v.  Norton,  1  Hill,  501  ;  R'^binson  v. 
Reynolds,  2  Q.  B.  211;  Hoffmann.  Bank  of  Milwaukee,  12  Wall. 
181.  Of  course,  the  cases  determined  upon  the  ground  that  the 
holder  of  sucli  pa|)er  received  it  to  a[)ply  upon  an  antecedent  debt, 
or  that  it  had  been  unlawfully  diverted  from  the  purpose  for  which 
it  was  designed,  have  no  application  to  the  circumstances  of  this 
case. 

The  judgments  of  the  courts  below  must  therefore  be  reversed, 
and  a  new  trial  ordered,  with  costs  to  abide  the  result. 

All  concur,  except  Miller,  J.,  absent. 

191 


ILL.  CAS.    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.     [CH.VI. 

Acceptance  Once   Delivered,  Irrevocable,  Except  when 
Procured  by  Fi'aud. 

Trent  Tile  Co.  v.  Ft.  Dearborn  Nat.  Bank  of  Chicago,    54  N.  J.  L.  33 

(23  A.  423). 

Error  to  circuit  court,  Mercer  county  ;  before  Justice  Scudder. 

Action  by  the  Ft.  Dearborn  National  Bank  of  Chicago  against 
the  Trent  Tile  Company  on  a  bill  of  exchange.  Judgment  for 
plaintiff.     Defendant  appeals.     Affirmed. 

The  other  facts  fully  appear  in  the  following  statement  by 
napp,  J. : — 

Riley  drew  a  bill  of  exchange  on  the  Trent  Tile  Company,  the 
plaintiff  in  error,  for  $850,  dated  at  Chicago,  November  7,  1888, 
payable  to  the  order  of  the  defendant  in  error.  The  defendant 
in  error  forwarded  the  bill  to  the  Mechanics'  National  Bank  of 
Trenton  for  presentation  and  collection.  The  bank  presented 
the  bill  to  the  drawee  on  the  12th  of  November,  and  its  accept- 
ance, payable  at  the  Mechanics'  Bank,  was  indorsed  on  the  bill  by 
drawee's  treasurer,  and  by  him  redelivered  to  the  bank.  There- 
after, and  on  the  same  day,  the  treasurer  of  tlie  tile  company 
learned  that  Riley  had  failed  on  the  10th  of  November.  Oa  the 
next  day  —  13ih  —  the  treasurer  applied  to  the  cashier  of  the 
Mechanics'  Bank  for  leave  to  revoke  tiie  acceptance,  and  to  erase 
the  indorsement  and  signature.  This  the  cashier  declined  to  per- 
mit, and  notice  thereupon  was  given  the  bank  to  refuse  payment 
of  the  bill.  At  the  time  of  the  acceptance  the  drawer  had  no 
funds  in  the  hands  of  the  tile  company,  and  was  indebted  to  it. 
Under  the  facts  set  forth  the  circuit  court  of  Mercer  county 
ordered  judgment  for  the  plaintiff  below  for  the  amount  of  the  bill 
and  interest.  The  present  writ  of  error  is  to  review  this  judg- 
ment. 

Argued  June  term,  1891,  before  the  Chief  Justice,  and  Van 
Syckel,  Knapp,  and  Garrison,  J  J. 

Knapp,  J.  (^after  stating  the  facts').  The  main  question  raised 
and  discussed  in  tliis  case  is  whether  the  drawee  of  a  bill  of 
exchange  can,  after  an  indorsement  of  acceptance  and  redelivery 
of  the  acceptance  to  the  agent  of  the  holder,  on  discovering  the 
insolvency  of  the  drawer,  revoke  such  acceptance,  the  drawee 
having  no  funds  of  the  drawer  in  his  hands.  The  general  rule  is 
that  an  acceptance  delivered  to  the  holder  is  irrevocable,  au  I  this 
is  so  whether  the  acceptance  is  on  account  of  funds  of  the  drawer 
of  the  bill  in  the  hands  of  the  acceptor,  or  for  tlie  accommodation 
of  earlier  parlies  to  tlie  bill.  Citation  of  authorities  for  the 
proposition  of  law  would  be  superfluous.  Tlie  approved  writers 
on  the  law  of  commercial  paper  and  the  adjudged  cases  are  as 
one  on  this  subject.  Rand  Com.  Paper,  pars.  216,  637.  In  com- 
mercial law,  such  an  engagement,  completed  by  delivery,  can  be 
discharged  only  by  payment  of  the  bill,  release  of  the  acceptance, 
or  its  waiver.  An  acceptance  delivered  to  the  agent  of  the  holder 
duly  authorized  to  receive  it,  is,  in  legal  effect,  and  for  all  purposes, 

192 


CH.VI.]    ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.    ILL.  CAS. 

delivery  to  the  bolder.  When  tlie  bill  bearing  the  signature  of 
the  acceptor  by  his  act  or  direction  comes  into  the  hands  of  such 
agent,  the  contract  becomes  eo  iustante  a  completed  one  between 
the  acceptor  and  the  f^rincipai  owner  of  the  bill.  A  bill  of 
exchange  forwarded  to  or  delivered  into  the  hands  of  a  bank  or 
banking-house  for  the  purpose  of  presentation  to  the  person  upon 
whom  the  bill  is  drawn  for  his  acceptance  in  the  usual  course  of 
business  is  a  transaction  that  creates  tiie  relation  of  principal  and 
agent  between  such  holder  and  the  bank,  wiih  authority  in  such 
agent  to  receive  in  the  holder's  behalf  delivery  of  the  acceptance 
when  signed.  The  Mechanics'  National  Bank  of  Trenton  was 
therefore  the  agent  of  the  plaintiff  to  procure  in  the  plaintiff's 
name  acceptance  of  the  bill  in  question.  The  bill  was  presented  to 
the  defendant  in  dne  course,  and  regularly  accepted  by  its 
authorized  oflicer,  and  delivered  to  such  agent  of  the  plaintiff. 
There  would  thus  ap[)ear  a  (iuislied  tian^action  of  legally  binding 
force,  vesting  rights  in  the  plaintiff  which  would  not  thereafter  be 
divested  witliout  its  consent.  Tlie  defendant,  however,  claims 
that  it  had  the  right  to,  and  did,  revoke  its  act  of  acceptance. 
The  contention  is  grounded  upon  the  authority  of  the  well-known 
case  of  Cox  u.  Troy,  5  Barn.  &  Aid.  474,  referred  to  by  all  the 
text-writers  on  negotial)le  instruments  since  its  decision.  This 
case  holds  that,  "where  a  defendant,  [drawee],  having  once  writ- 
ten his  acceptance  with  the  intention  of  acce|)ting  a  bill,  after- 
wards changes  his  mind,  and  before  it  is  communicated  to  the 
holder,  or  the  bill  delivered  back  to  him,  oblitei-ates  his  accept- 
ance, he  is  not  bouuii  as  an  acceptor.  The  propositions  seemed 
so  plainly  just  that  the  justices  who  decided  the  case  said  that  the 
rule  rested  upon  princi|)les  of  common  sense.  The  case  was 
simply  this:  A  bill  was  handed  to  the  drawee  for  his  acceptance. 
Within  the  time  allowed  him  for  decision  he  had  written  his  name 
upon  the  bill;  then,  on  reflection,  decided  not  to  accept  it,  erased 
his  name,  and  handed  it  hack  to  the  party  who  had  delivered  it 
to  him.  Prior  to  this  decision  there  were  no  dicta  to  be  found  of 
eminent  English  jurists  tending  to  the  doctrine  that  the  mere  act 
of  signing  in  secret  as  an  acceptor  of  a  bdl  bound  the  party  so 
signing  to  the  obligation  of  a  completed  contract;  and  in  Thorn- 
tons. Dick,  4  Esp.  270,  it  seems  to  have  been  so  decided.  But 
this  doctrine  was  ignored  in  Cox  v.  Troy,  where  the  elemental 
principle  was  api)lied  tliat  the  secret  act  of  a  party  could  ripen 
into  a  binduig  contract  only  upon  the  intentional  promulgation  of 
such  act  by  delivery  or  its  equivalent.  The  transaction  was  in  no 
true  sense  a  revocation.  It  was  a  refusal  to  accept  the  draft. 
See,  also,  Bank  of  Van  Diemen's  Land  v.  Bunk  of  Victoria,  L. 
R.  3  P.  C.  52G.  But  it  is  not  apparent  how  the  defendant  can 
profit  by  anything  decided  in  the  case  of  Cox  v.  Troy.  It  is  no 
authority  for  the  asserted  ri^lit  to  revoke  its  act  after  delivery  to 
the  agent  of  the  plaintiff.  For  such  a  right  neither  dictum  nor 
authority  has  been  found  in  any  reported  case  determined  upon 
principles  of  the  common  law.     The  case  of  Burrows  v.  Jemino, 

13  193 


ILL.  CAS.     ACCEPTANCE  AND  AGREEMENTS  TO  ACCEPT.     [CH.  VI. 

2  Strange,  733,  is  cited  as  a  case  in  point  for  the  plaintiff  in  error. 
The  point  decided  was  tliat  a  man  could  not  be  sued  in  England 
on  his  acceptance  of  a  bill  of  exchange  abroad  after  he  had  been 
discharged  from  liability  by  the  laws  of  the  foreign  jurisdiction. 
The  custom  referred  to  in  the  brief  of  counsel,  and  which  received 
the  consideration  of  the  court  in  that  case,  was  not  the  custom  of 
merchants  in  England,  bat  the  law  as  it  existed  in  Leghorn, 
where  the  contract  of  acceptance  arose.  There,  if  the  drawer 
failed,  and  the  acceptor  had  not  sufficient  assets  of  the  drawer  in 
his  hands  at  the  time  of  the  acceptance,  the  acceptance  was  void. 
But  here,  in  the  absence  of  fraud  on  the  part  of  the  plaintiff, 
which,  it  may  be  said,  is  feebly  asserted,  and  in  no  degree  sus- 
tained, the  insolvency  of  the  drawer,  or  the  want  of  funds  with 
the  drawee,  is  no  answer  to  his  claim  as  a  bona  fide  holder  of  the 
bill.  The  judgment  below  was  in  accordance  with  the  foregoing 
views,  and  should  be  affirmed. 
194 


CHAPTER     VII. 

THE    TRANSFER   OF   BILLS  AND  NOTES  BY  DELIVERY  AND  IN 

GENERAL. 

Secti'^   /4.  The  assignability  of  choses  in  actionin  general  —  Non-nego- 
tiable paper. 
15.  Transfer  of  negotiable  bills  and  notes  payable  to  bearer. 

76.  Liability  of  assignors  of  bills  and  notes  payable  to  bearer. 

77.  Liability  of  broker  in  transfer  of  paper  by  delivery. 

78.  Transfer  by  delivery  of  paper  payable  to  order. 

79.  Sale  of  bill  or  note  without  delivery. 

80.  Implied  transfer  of  bills  and  notes. 

81.  Transfer  by  legal  process  —  Attachment,  garnishment,  exe- 

cution. 

82.  Transfer  donatio  mortis  causa. 

^  §  T4.  The  ussignability  of  choses  iii  action  in  gen- 
eral —  Non-negotiable  paper. —  It  is  a  well-known  rule  of 
the  common  l;iw  that  chosf^s  in  action  cannot  be  a.ssigned, 
so  ts  to  enaltle  the  assignee  to  maintain  sm  action  upon 
it;  and  this  is  still  the  rule  in  the  English-speaking 
wrr.'d,  where  it  h.is  not  been  changed  by  statute.^ 
At  a  very  early  day,  the  English  Court  of  Chancery  recog- 
nized the  public  demand  for  the  assignment  of  at  least  cer- 
tain executory  contracts  ;  and  held  such  assignment  to  be 
V  iliil,  authorizing  the  assign<'C  to  compel  the  assignor  to 
sue  on  the  contract  in  his  name.  The  courts  of  law  ulti- 
mately recognized  the  validity  of  the  assignment,  so  far  as 

J  Lord  Coke  tells  us,  in  Lampet's  Case,  10  Rep.  48:  "The  great 
wisdom  and  policy  of  the  sages  and  founders  of  our  law  have  provided 
iliat  no  possibility,  title,  riiiht,  nor  thing  in  action  shall  be  granted  or 
assigned  to  strangers,  for  that  would  be  the  occasion  of  multiplying  of 
contentions  and  suits,  of  great  oppression  of  the  people,  and  chiefly  of 
ti'rre-tenants,  and  the  subversion  of  the  due  and  equal  execution  of 
justice."  See  also  Ilay  v.  Gr*  en,  12  Cush.  282;  Boston  Ice  Co.  v.  Potter, 
123  Mass.  28  (29  Am.  Rep.  9);  Greenby  v.  Wilcocks,  2  Johns.  (3  Am. 
l)ic.  379)  ;  aud  general  works  on  Contracts,  such  as  Anson,  Bishop  or 
Lawaon. 

195 


§  74     TRANSFER  OF  BILLS  AND  NOTES  IN  GENERAL.    [CH.  VII. 

to  permit  the  assignee  to  bring  suit  on  the  contract  in  the 
name  of  the  assignor.^  In  very  many  of  the  States,  now, 
this  common  law  rule  has  been  completely  abrogated  by 
statute,  so  that  the  assignee  of  any  contract, —  with  the 
exception  of  a  few  contracts  of  a  personal  character,  which 
need  not  be  referred  to  in  this  connection — may  sue  in 
his  own  name. 

But,  prior  to  these  modifications  of  the  common  law 
rule  by  Chancery,  and  by  modern  statutes,  and  certainly 
independently  of  them;  a  custom  grew  up  among  mer- 
chants, which  was  recognized  by  the  common  law  courts  as 
valid  and  binding,  to  recognize  the  right  of  the  payee  of 
bills  of  exchange  and  promissory  notes  to  transfer  the  full 
legal  title  to  the  same.  But  in  order  that  such  assignee 
may  acquire  the  full  legal  title,  the  bill  or  note  had  to  con- 
tain all  the  required  elements  of  negotiable  paper,  as  they 
have  been  explained  in  cha[)ter  II.  If  a  paper  was  non- 
negotiable,  even  though  it  had  in  many  respects  the  form 
and  characteristics  of  a  negotiable  bill  or  note,  the  common 
law  rule  applied,  and  the  assignee  could  only  bring  suit  in 
the  name  of  the  assignor. ^ 

Another  important  difference  between  negotiable  and 
non-negotiable  paper  is,  that  the  latter  is  transferred  sub- 
ject to  all  the  defenses  that  may  be  set  up  against  the 
original  payee;  whereas,  in  the  transfer  of  a  negotiable 
instrument  to  a  bona  fide  holder,  the  latter  takes  it  free 
from  equitable  defenses,  i.  e.,  those  which  do  not  ques- 
tion i\ie  prima  facie  validity,  and  which  do  not  appear  on 
the  face  of  the  paper. ^ 

1  Story  V.  Livingston,  13  Pet.  359;  Fay  v.  Gaynon,  131  Mass.  31; 
McWilliams  v.  Webb,  32  Iowa,  577;  and  Anson,  Bishop,  or  Lawson  on 
Contracts. 

2  Costello  V.  Crowell,  127  Mass.  293  (34-  Am.  Rep.  3G7);  Backus  v. 
Danforth,  10  Conn.  297;  Prescott  v.  Hull,  17  Johns.  284;  Johnstons. 
Speer,  92  Pa.  St.  227  (37  Am.  Rep.  675)  ;  Weidler  v.  Kauffman,  14  Ohio, 
455;  Hughes  v.  Frum,  41  W.  Va.  445  (23  S.  E.  604). 

3  See  post,  chapter  IX,  on  Bona  Fide  Holders  as  to  the  defenses  which 
may  be  set  up  against  them.  See,  also,  as  to  non-negotiable  paper, 
Cowthey  V.  Vandenburgh,  lOlU.  S.  572;  Bradford  u.  Williams,  91  N.C.  7; 
Dyer  v.  Homer,  22  Pick.  253;  Haskell  v.  Brown,  65  111.   29;    Hunter  v. 

196 


CH.   VII.]       TKANSFEll  OF  BILLS  AND  NOTES  I\  GENERAL.    §    75 

The  mode  of  cassignment  of  non-negotiable  instruments 
differs  in  no  respect  from  that  of  any  other  contract. 
Although  some  sort  of  written  assignment  is  customarily 
employed,  written  either  on  the  instrument  itself  or  on  a 
separate  piece  of  paper;  a  verbal  assignment  with  a  deliv- 
ery of  the  instrument  is  equally  effective  to  pa.ss  the  title; 
an  equitable  title,  where  the  common  law  prohil)ition  of 
a.-^signmcnt  of  choses  in  action  still  prevails;  and  a  legal 
title,  where  it  has  been  abrogated  by  statute.^ 

§  75.  Transfer  of  negotiable  bills  and  notes  payable 
to  bearer. —  It  was  at  one  time  thought  that,  in  order  that 
a  bill  or  note  mny  be  negotiahle ,  it  had  to  be  made  payable 
to  the^;«7/ee  or  his  oi^der,  or  to  tlie  order  o/the  payee.  But 
it  has  long  been  definitely  established  by  the  decisions,  that 
a  note  or  bill,  payable  to  bearer^  or  to  A.  (the  payee)  or 
bearer,  was  negotiable  in  the  fullest  sense  of  the  term.-^  But 
negotiable  bills  or  notes,  which  arc  payable  to  bearer,  may 
be  transferred  by  delivery  ;  and  the  legal  title  to  the  same 
passes  without  any  written  transfer  or  indorsement.^  And 
this  is  likewise  the  case,  where  a  bill  or  note,  originally 
payable  to  order,  is  made  payable  to  bearer  by  a  prior  in- 
dorsement in  blank. ^ 

HenniDger,   93  Pa.  St.  373;  Wetter  v.  Kiley,  95  Pa.  St.  461;    Cohen  v. 
Prater,  55  Ga.  203;  Sharts  v.  Await,  73  lud.  304. 

*  See  Hill  v.  Alexander,  2  Kan.  App.  151. 

2  Walnut  V.  Wade,  103  U.  S.  083;  Eddy  v.  Bond,  19  Me.  461  (36  Am. 
Dec.  767);  Truesdell  v.  Thompson,  12  Met.  565;  Dean  v.  Hall,  17  Wend. 
214;  Hutchings  v.  Low,  1  Green  (N.  J.  L.),  246;  Carr  v.  LeFevre,  27  Pa. 
St.  413;  Hathcock  v.  Owen,  44  Miss.  799;  Smith  v.  Rawson,  61  Ga.  208; 
Avery  v.  Latimer,  14  Ohio,  542;  Woodruff  v.  King,  47  Wis.  261  (2  N.  W. 
452)  ;  Johnson  v.  Mitchell,  50  Tex.  212  (32  Am.  Rep.  002). 

3  Ilolcomb  V.  Beach,  112  Mass.  450;  Walnut  v.  Wade,  103  U.  S.  683; 
Lyle  V.  Burke,  40  Mich.  41'«);  11.11  v.  Allen,  37  Ind.  541 ;  Coco  v.  Gumbel, 
47  La.  Ann.  900;  Woodruff  v.  Kinj:,  47  Wis.  261  (2  N.  W.  452)  ;  Lamb  v. 
Matthews,  41  Vt.  42.  But  see,  contra,  by  statute,  requiring  indorse- 
ment, Garvin  v.  Wiswell,  83  111.  215. 

*  WatervlietBank  v.  White,  1  Denio,  608,  Beall  v.  Gen.  Elect.  Co.,  &c., 
38  N.  Y.  S.  527;  Curtis  v.  Sprague,  51  Cal.  239;  Bank  of  Lassen  Co.  r. 
Sherer,  108  Cal.  513  (41  P.  415);  Bank  of  Winona  v.  Wofiford,  71  Mis. 
711  (14  So.  262);  Columbus  Ins.  Co.  &c.  Co.  v.  First  Nat.  Bank,  73 
Mbs.  90  (15  So.  138).     See    Ilumphreyville  r.  Culver,  73  111.  485. 

197 


§    7(5      TRANSFER  OF  BILLS  AND  NOTES  IN  GENERAL.    [CH.  VII. 

§  76.   Liability  of  assignors  of  bills  and  notes  payable 

to  bearer. —  The  popular  notion  is  that,  when  ii  bill  or  note 
is  made  payable  to  bearer,  or  where  it  is  originally  paya- 
ble to  the  order  of  the  payee,  and  be  indorses  in  blank, 
and  thereby  makes  it,  as  to  subsequent  transferees,  an  in- 
slrumeiit  payable  to  bearer,  the  assignor  or  transferrer  not 
only  can  pass  legal  title  to  the  same  by  delivery  without 
indorsement ;  but  that  he  is  free  from  all  liability  on  such 
a  note  or  bill,  if  he  had  acquired  title  to  it  in  a  lawful  way. 
But  this  is  not  the  law.  The  only  difference  between  the 
liability  of  an  indorser  of  paper  payable  to  order  and  that 
of  transferrer  of  paper  which  is  payable  to  bearer,  is  that 
in  the  first  case,  the  indorser  guarantees  the  payment  of 
such  note  or  bill;  whereas  the  latter  does  not.  The  trans- 
ferrer of  a  bill  or  note  does  not  warrant  the  solvency  of 
the  maker  or  acceptor,  respectively. 

There  is  some  respectable  authority  for  holding  that 
where  the  maker  of  a  note  or  the  acceptor  of  a  bill  be- 
comes insolvent,  the  loss  falls  on  the  person  who  has  title 
to  such  note  or  bill,  when  the  insolvency  occurs,  and  that 
he  warrants  the  solvency  of  the  primary  obligor  at  the  time 
of  the  transfer  of  the  note  or  bill,  whether  he  knew  of  the 
insolvency  or  not.^  But  there  are  other  cases,  in  which 
it  is  held  that  the  transferrer  is  liable  to  the  transferee  on 
account  of  the  insolvency  of  the  maker  or  acceptor  at  or 
before  the  time  of  transfer,  only  when  he  knew  of  the  in- 
solvency at  the  time  of  the  tiansfer.  That  is,  the  trans- 
ferrer only  warrants  that  at  the  time  of  the  transfer  he  did 
not  know  of  the  insolvency  of  the  maker  or  acceptor,  and 
the  consequent  comparative  valuelessness  of  the  paper, ^ 
it  being  only  a  special  a{)plication  of  the  doctrine  that  the 

1  Wainwright  v.  Webster,  11  Vt.  576  (34  Am.  Dec.  707);  Roberts  v. 
Fisher,  43  N.  Y.  159  (3  Am.  Rep.  G80)  ;  Merchants'  Nat.  Bank  v.  Spates 
41  W.  Va.  27;  23  S.  E.  681;  Westfall  v.  Braley,  10  Ohio  St.  188  (75  Am. 
Dec.  509) ;  Townsend  v.  Bank  of  Racine,  7  Wis.  185.  See  Springer  v. 
Puttkamer,  159  111.  567  (42  N.  E.  876). 

2  Young  V.  Adams,  6  Mass.  182;  Addrich  v.  Jackson,  5  R.  I.  218;  Ware 
V.  Street,  2  Head,  609  (75  Am.  Dec.  755)  ;  Popley  v.  Ashley,  6  Mod.  147; 
Bayard  v.  Shuuk,  1  Watts  &  S.  92  (37  Am.  Dec.  441). 

198 


CH.   VII.]   TRANSFER  OF  BILLS  AND  NOTES  IN  GENERAL.       §    7() 

transferrer  warrants  that  he  does  not  know  of  anything 
affecting  the  validity  or  value  of  the  bill  or  note.^ 

The  transferrer  of  paper  payable  to  bearer  may,  of 
course,  expressly  guarantee  the  payment,  either  verbally, 
in  a  separate  writing,  or  by  indorsement ;  and  he  will  be 
bound  thereby. 2 

On  the  other  hand,  the  transferrer  warrants  that  the  bill 
or  note  is  free  from  any  defense,  which  would  affect  the 
genuineness  or  validity  of  the  paper,  as  an  obligation  of  the 
maker,  drawer  or  acceptor,  or  which  would  invalidate  his 
own  title  tp  the  instrument.  He  is,  therefore,  liable  if  the 
signature  of  maker,  drawer  or  acceptor  or  indorser  has 
been  forged,^  or  any  one  of  the^^e  parties,  whose  names  are 
on  the  paper,  is  incompetent  to  contract,  because  of  some 
legal  disability,*  or  the  instrument  is  illegal  and  void.^ 
He  also  impliedly  guarantees  his  own  title  to  the  paper.^ 

1  See  Bridge  v.  Batchelder,  9  Alleu,  394;  Littauer  v.  Goldman,  72  N. 
Y.  506  (28  Am.  Rep.  171) ;  People's  Bank  v.  Bogart,  81  N.  Y.  101  (37  Am. 
Rep.  481J. 

2  Bruce  v.  Burr,  67  N.  Y.  237;  Milks  v.  Rich,  80  N.  Y.  269  (36  Am. 
Rep.  615");  McPherson  Nat.  Bank  v.  Velde,  49  111.  App.  21. 

3  Meyer  v.  Richards,  163  U.  S.  885;  Worthington  v.  Cowles,  112 
Mass.  30;  Bell  v.  Dagg,  60  N.  Y.  528;  Ross  v.  Terry,  63  N.  Y.  613; 
Frank  v.  Lanier,  91  N.  Y.  112;  Terry  v.  Bissell,  26  Conn.  23;  Allen  v. 
Clark,  49  Vt.  390;  Swanzey  v.  Parker,  50  Pa.  St.  441  (88  Am.  Dec.  549) ; 
Bankhead  v.  Owen,  60  Ala.  475;  Challis  v.  McCrum,  22  Kan.  157  (31 
Am.  Rep.  181);  Snyder  v.  Reno,  38  Iowa,  329 ;  Giffert  v.  West,  37  Wis. 
115;  Brown  v.  Boone  (Ky.  '97),  41  S.  W,  18.  And  see  Spalding  v.  Gates 
(Ky.  '97),  41  S.  W.  440,  as  to  requirement  of  diligence  on  the  part  of  the 
assignee  to  notify  and  proceed  against  the  assignor  in  such  a  case. 

*  Baldwin  v.  Van  Deusen,  37  N.  Y.  487;  Giffert  v.  West,  37  Wis.  115. 
It  has,  however,  been  held  by  the  United  States  Supreme  Court,  that  where 
the  paper  is  somegovernmentor  municipal  bond,  the  transferrer  is  not  lia 
ble,  if  the  parties  who  executed  and  negotiated  the  bonds  were  not  legally 
qualified  to  do  so.  Otis  i;.  Cullom,  92  U.  S.  448.  But  see  Meyer  r.  Rich- 
ards, 163  U.  S.  385.     And  see  Rogers  v.  Walsh,  12  Neb.  28(10  N.  W.  467). 

5  Young  V.  Cole,  3  Bing.  N.  C.  724;  Costigan  v.  Hawkins,  22  Wis.  74 
(94  Am.  Dec.  583);  Morrison  v.  Lovell,  4  W.  Va.  346;  Challis  v. 
McCrum,  22  Kan.  157  (31  Am.  Rep.  181).  In  New  York,  the  assignor  is 
liable  as  an  implied  guarantor  of  the  legality  of  the  bill  or  note,  only 
when  he  knows  of  the  illegality  at  the  time  of  his  transfer  of  it.  Lit- 
tauer V.  Goldman,  72  N.  Y.  506  (28  Am.  Rop.  171). 

8  Baxter  v.  Duren,  29  Me,  434  (50  Am.  Dec,  602). 

199 


§    78      TRANSFER  OF  BILLS  AND  NOTES  IN  GENERAL.    [CH.  VII. 

These  warranties  are  implied,  and  hence  they  cannot  be 
enforced,  where  the  transferrer  expressly  withdraws  them, 
and  the  transfer  is  made  with  an  express  disclaimer  of  con- 
tingent liability  on  the  part  of  the  transferrer. ^ 

§  77.  Liability  of  broker  in  transfer  of  paper  by  de- 
livery.—  Where  a  bill  or  note  payable  to  bearer  is  sold 
through  a  broker,  and  he  discloses  his  agency,  and  gives 
the  name  of  his  principal,  the  principal  and  not  he  will  be 
bound  by  the  implied  warranties,  which  have  been  explained 
in  the  preceding  section. ^  But  if  he  conceals  his  agency 
altogether,  so  that  he  assumes  the  role  of  principal,  or 
where  he  only  fails  to  disclose  the  name  of  the  principal, 
he  is  personally  bound  to  the  purchaser.^  The  broker  may 
in  any  case  bind  himself  by  an  express  warranty,^  or,  where 
he  is  liable  on  these  implied  warranties,  exempt  himself 
from  such  liability  by  an  express  agreement.^ 

§  78.  Transfer  by  delivery  of  paper  payable  to 
order. —  The  only  complete  way  of  transferring  negotiable 
paper,  which  is  payable  to  order,  is  by  indorsement,  and  this 
is  the  only  way  in  which  the  legal  title  to  such  paper  may 
be  transferred.^  But  a  delivery  of  a  note  or  bill,  payable 
to  order,  without  indorsement,  will  pass  the  equitable  title 
to  such  paper. ^     But  where  one  has  possession  of  a  note  or 

1  Beal  V.  Roberts,  113  Mass.  525;  Bell  v.  Dagg,  60  N.  Y.  528;  Ross  v. 
Terry,  63  N.  Y.  613. 

2  76. 

3  Cabot  Bank  v.  Morton,  4  Gray,  156;  Worthington  v.  Cowles,  112 
Mass.  30;  Morrison  v.  Currie,  4  Duer,  79. 

4  Wilder  v.  Cowles,  100  Mass.  487. 

5  Bell  V.  Dagg,  60  N.  Y.  528. 

6  See  next  cliapter  for  discussion  of  transfer  by  indorsement. 

'  Richards  v.  Stephenson,  99  Mass.  311;  Hale  v.  Rice,  124  Mass.  392; 
Van  Riper  v.  Baldwin,  19  Hun,  344;  Forster  v.  Second  Nat.  Banli,  61  111. 
App.  272;  Galway  v.  Fullerton,  17  N.  J.  Eq.  (2  C.  E.  Gr.)  389;  Jenkins 
V.  Wilkinson,  113  N.  C.  532  (18  N.  E.  696) ;  Miles  v.  Reiniger,  39  Ohio  St. 
499;  First  Nat.  Bank  v.  Strang,  72  111.  559;  Taylor  v.  Reese,  44  Miss.  89; 
National  Bank  v.  Leonard,  91  Ga.  805  (18  S.  E.  160);  Corle  v.  Monk- 
house,  50  N.  J.  Eq.  537  (25  A.  157);  Blesse  v.  Blackburn,  31  Mo.  App. 
264;  Esau  U.Greene  Button  Co.  (Wis. '97),  68  N.  W.  405.  The  title  so  ac- 
200 


CII.  Vir.]   TRANSFER  OF  BILLS  AND  NOTES  IN  GENERAL.       §    78 

bill  payable  to  the  order  of  another  person,  unindorsed, 
the  presumption  is  that  the  title  is  in  the  latter,  and  the 
burden  is  on  the  one  having  possession  to  prove  title. ^  A 
similar  title  to  paper  payable  to  order  is  acquired  where  the 
paper  is  assigned  by  deed  or  other  separate  instrument  of 
assignment,  whether  it  be  accompanied  by  a  delivery  of  the 
bill  or  note  or  not.^ 

In  all  such  ca:>es,  the  transferee  by  assignment  does  not 
acquire  the  superior  title  of  a  bona  fide  holder.  He  does 
not  acquire  title  in  the  usual  course  of  business,  and  there- 
fore he  takes  title  to  the  bill  or  note  subject  to  all  the 
defenses  which  might  be  set  up  against  his  assignor. ^ 

Sometimes,  however,  a  delivery  or  assignment  is  made 
of  a  bill  or  note  payable  to  order  presently,  and  an  indorse- 
ment is  made  subsequently.  As  soon  as  the  indorsement  is 
made,  the  transferee  and  indorsee  becomes  a  bona  fide 
holder.  Where  the  subsequent  indorsement  is  made  in 
pursuance  of  a  promise  to  indorse,  contemporaneous  with 

quired  is  properly  called  aa  equitable  title  only  in  those  States,  in  which 
assignments  of  chases  in  action  in  general  are  still  valid  only  in  equitable. 
But  for  the  purpose  of  distinguishing  the  rights  of  such  an  assignee  or 
transferee  from  those  of  an  indorsee,  it  is  still  customary  to  call  the 
title  of  such  an  assignee  equitable,  although  statute  has  made  the  title 
legal,  and  enables  the  assignee  to  sue  in  his  own  name. 

'  Durein  v.  Moeser,  3(5  Kan.  441  (13  P.  797);  Niess  v.  Coates,  57  111. 
App.  216. 

2  Freeman  v.  Perry,  22  Conn.  617;  Burdick  v.  Green,  15  Johns.  247; 
Burrows  u.  Keays,  37  Mich.  450;  McGee  v.  Riddlesbarger,  39  Mo.  365; 
Osgood  V,  Artt,  17  Fed.  575;  Foreman  v.  Buckwith,  73  Ind.  55;  Franklin 
V.  Twogoodj  18  Iowa,  515;  Burnham  v.  Merchants'  Exch.  Bank,  92  Wis. 
277  (66  N.  W.  510);  Wood  v.  Duval  (Iowa,  '97),  69  N.  W.  1061. 

3  Simpson  y.  Hall,  47  Conn.  417;  Thomson-Houston  Elec.  Co.  v. 
Capitol  Electric  Co.,  56  Fed.  849;  Losee  v.  Bissell,  76  Pa.  St.  459; 
Freund  v.  Importers  &c.  Nat.  Bank,  76  N.  Y.  352  (transfer  of  an  indor^ed 
check);  Miller  v.  Tharcl,  75  N.  C.  148;  Benson  v.  Abbott,  95  Ga.  6'.» 
(22  S.  E.  127);  Matteson  v.  Morris,  40  Mich.  52;  Sturges  v.  Miller,  80 
111.  241;  Patterson  u.  Case,  61  Mo.  439;  Younker  v.  Martin,  18  Iowa,  143; 
Planters'  &c.  lus.  Co.  v.  Funstall,  72  Ala.  142;  Hale  v.  Hitchcock,  3 
Kan.  App.  23  (44  P.  446);  Terry  v.  Allis,  16  Wis.  478;  Hadden  v. 
Rodkey,  17  Kan.  429;  Hardie  u.  Mills,  20  Ark.  154.  But  see  Brown  v. 
Boone  (Ky.  '97),  41  S.  W.  18,  as  to  the  implied  duty  of  assignee  to  collect 
the  note  or  bill  so  assigned. 

201 


§    79      TRANSFEIl  OF  BILLS  AND  NOTES  IN  GENERAL.    [CH.  VII. 

the  assignment  or  delivery  of  the  paper,  the  indorsement 
will  relate  back  to  the  time  of  such  assignment  or  delivery, 
po  as  to  shut  out  all  equities  as  effectually  as  if  the  indorse- 
ment had  been  made  at  or  before  the  time  of  delivery.* 
And  where  the  indorsement  is  subsequently  refused,  the 
assignor  may  be  compelled  to*  indorse  by  a  decree  of  the 
court  for  specific  performance.^  But  if  there  was  no 
contemporaneous  agreement  for  a  subsequent  indorsement, 
the  indorsement  operates  from  the  time  of  indorsement, 
and  the  indorsee  takes  the  paper  subject  to  any  defense 
which  might  come  to  his  knowledge  prior  to  the  indorse- 
ment,^ except  set-offs  or  counter-claims,  which  might 
otherwise  be  set  up  against  him  as  assignee.^ 

§  79.   Sale  of   bill  or  note  without  delivery. —  It  is   a 

generally  accepted  principle  of  law,  that  a  contract  for  the 
sale  of  goods  or  personal  property  will  pass  title  without 
delivery,  if  such  be  the  intention  of  the  parties.^  And  the 
same  conclusion  is  reached,  where  the  subject-matter  of 
the  sale  is  a  bill,  note,  or  check.  The  purchaser  acquires  a 
title  to  the  same  without  delivery,  which  he  can  assert 
against  every  one  but  a  subsequent  holder  for  value, 
who  acquires  possession  of  the  paper  without  notice  of  the 
prior  sale.^  But,  generally,  delivery  is  essential  to  the 
transfer  of  title.  And  no  title  will  pass  on  the  executory 
contract  of  sale,  unless  the  intention  to  pass  title  without 
delivery  is  clearly  established.^ 

1  Haskell  v.  Mitchell,  53  Me.  468  (89  Am.  Dec.  176) ;  Weeks  v.  Medlar, 
20  Kan.  57;  Brown  v.  Wilson,  45  S.  C.  519  (23  S.  E.  630);  Birdsell 
Mfg.  Co.  V.  Brown,  96  Mich.  213  (55  N.  W.801). 

2  Birdsell  Mfg.  Co.  v.  Brown,  96  Mich.  213  (55  N.  W.  801). 

3  Lancaster  Nat.  Bank  v.  Taylor,  100  Mass.  18  (97  Am.  Dec.  70;  1  Am. 
Rep.  71);  Clark  v.  Whitaker,  50  N.  H.  474  (9  Am.  Rep.  286);  Beard  v. 
Dedolph,  29  Wis.  136. 

*  Ranger  v.  Carey,  1  Mete.  369;  Beard  v.  Dedolph,  29  Wis.  136. 

5  See  Tiedeman  on  Sales,  §  84. 

6  See  Shelden  v.  Parker,  3  Hun,  498;  Meyer  v.  Richards,  163  U.  S, 
385;  Allison  v.  Barrett,  16  Iowa,  278;  Allison  v.  King,  21  Iowa,  302; 
Mabin  v.  Kirby,  4  Rich.  Eq.  105.     See  Dryden  v.  Britton,  19  Wis.  22. 

'  Goodwin  v.  Davenport,  47  Me.  112  (74  Am.  Dec.  478)  ;  Clarku.  Boyd, 
202 


CH.   Vri.]   TRANSFER  OF  BILLS  AND  NOTES  IN  GENERAL.       §    81 

§  80.  Implied  transfer  of  bills  and  notes. —  It  is  a  gen- 
eral rule  of  the  law  of  bailments,  that  where  a  thing  is 
pledged  to  secure  the  payment  of  the  debt,  the  assignment 
of  the  debt  will  by  implication  of  law  pass  the  title  to  fhe 
pledge  to  such  assignee.  And  the  same  rule  obtains,  where 
the  thing  pledged  is  a  bill  or  note.^  And  a  renewal  of  a 
note  or  bill  will  likewise  carry  by  implication  all  paper  held 
as  collateral  security  for  the  original.^ 

§  81.  Transfer  by  legal  process  —  Attacliment,  garnish- 
ment, execution. —  The  three  principal  legal  processes, 
whereby  property  may  be  transferred  to  a  creditor  in  sat- 
isfaction of  his  claim,  are  attachment,  garnishment  and 
execution.  They  are  all  the  creatures  of  statute,  and 
whether  bills,  notes  and  other  commercial  paper  can  be 
transferred  by  means  of  them  for  the  satisfaction  of  the 
debts  of  the  holder,  depends  upon  the  language  of  the  local 
statute,  under  which  the  question  arises.  That  is,  each 
statute  specifies  what  kinds  of  properly  may  be  reached  by 
attachment  or  execution,  and  pr()[)eity  which  does  not  come 
within  the  description  contained  in  the  statute,  which  pro- 
vides for  the  attachment  or  other  process  for  the  enforce- 
ment of  debts,  cannot  be  reached  by  means  of  such  process. 
It  is  probable,  however,  that  a  creditor's  bill  in  equity  can 
reach  commercial  paper,  in  any  case  where  attachment  or 
execution  is  unavoidable.  In  some  of  the  statutes,  bills, 
notes,  etc.,  are  exi)ressly  enumerated  among  the  property 
Vt^hich  may  be  reached  by  means  of  the  statutory  process; 
while  in   others  choses  in   action   are   onl}''   referred  to  in 

2  Ohio,  56;  Mott  v.  Wright,  4  Biss.  53;  Davis  v.  Johnson,  4  Colo.  App. 
645;  Wulschner  v.  Sells,  87  lud.  71  ;  Weader  v.  Bank,  126  Ind.  Ill  (25 
N.  E.  887) ;  Meyer  v.  Richards,  163  U.  S.  385. 

1  Marston  v.  Allen,  8  M.  &  \V.  494;  Walker  v.  Kee,  14  S.  C.  144; 
Keohane  v.  Smith,  97  111.  156;  Kelley  v.  Whitney,  45  Wis.  110  (30  Am. 
Rep.  697);  Hall  v.  Mobile  &c.  R.  R.  Co.,  58  Ala.  10;  Updegraft  v. 
Edwards,  45  Iowa,  513;  Debruhl  v.  Maas,  54  Tex.;464;  Carlton  v.  Buck- 
ner,  28  Ark.  60;  Johnson  v.  Carpenter,  7  Minn.  176;  Bell  v.  Simpson,  75 
Mo.  485. 

2  Kiddtr  v.  Mcllhanney,  81  N.  C.  123. 

203 


§   82      TRANSFER  OF  BILLS  AND  NOTES  IN  GENERAL,    [cil.   \U. 

general  terras.     The  student  niust  refer  to  the  local  statutes 
for  a  closer  study  of  this  question.^ 

§  82.  Transfer  donatio  mortis  causa.  —  The  law,  in 
respect  to  gifts  made  iu  contemplation  of  death,  is  fully 
set  forth  in  treatises  on  personal  property,  and  a  full  dis- 
cussion of  the  general  subject  is  not  needed  here.  It  is, 
however,  advisable  to  state,  for  the  refreshment  of  the 
memory  of  the  student,  that  in  order  that  the  absolute 
title  to  the  thing  so  donated  may  puss  to  the  donee,  and 
be  enforceable  after  the  death  of  the  donor,  the  following 
conditions  are  required  to  be  fulfilled:  ( 1)  the  gift  must 
be  made  in  apprehension  of  death;  (2)  the  donor  must  die 
of  the  same  disease  which  created  the  apprehension  of 
death;  (3)  the  thing  donated  must  have  been  delivered  to 
and  accepted  by  the  donee  or  by  some  third  person  for 
him. 

At  one  time  it  was  held  to  be  doubtful  whether  a  chose 
in  action  could  be  the  subject  of  a  donaiio  mortis  causa. 
It  was  first  held,  in  relaxation  of  the  original  rule, 
that  bills,  notes,  and  other  commercial  paper,  could  be 
so  transferred,  where  they  were  payable  to  bearer, 
or  Avhere  they  were  payable  to  order  and  indorsed  by 
the  donor.  Finally,  it  was  held,  and  it  is  the  law  to- 
day, that  indorsement  is  in  no  case  essential ;  that  where 
the  jjaper  was  payable  to  the  order  of  the  donor,  the  donee, 
on  delivery  and  acceptance,  at  least  acquired  an  equitable 
title,  which  he  could  successfully  assert  against  the  personal 
representatives  of  the  deceased  donor,  as  well  as  against 
the  i)arties  to  the  note  or  bill.^  But  the  donor  cannot  make 
a  valid  donatio  mortis  causa  of  his  own  bill,  note,  or  check, 

1  For  a  summary  of  the  statutory  provisions,  see  Tiedeman  on  Com- 
mercial Paper,  §  251. 

2  House  V.  Grant,  4  Lans.  296;  Stevens  v.  Stevens,  2  Hun,  470;  Chase 
V.  Redding,  13  Gray,  418;  Hunt  ?j.  Hunt,  119  Mass.  474;  Brovvn  v.  Brown, 
18  Conn.  409  (46  Am.  Dec.  338)  ;  Burke  v.  Bishop  &  Risley,  27  La.  Ann. 
465  (21  Am.  Rep.  567)  ;  Ashbrook  v.  Ryon,  2  Bush,  228  (92  Am.  Dec.  481) ; 
Darlaud  v.  Taylor,  52  Iowa,  503  (3  N.  W.  510). 

204 


CH.  VII.]         TRANSFER  OF  BILLS  AND  NOTES,  ETC.         ILL.   CAS- 

since  his  own  paper  is  only  an  executory  contract;  and  if  it 
be  without  consideration,  as  is  most  likely  in  such  cases, 
would  not  be  an  enforceable  contract.^ 


ILLUSTRATIVi:  CASES. 

Mumford  v.  Weaver,  18  K.  I    801  (31  A.  1). 

Weader  v.  Frost  Nat.  Bank,   120  lud.  Ill  C-'5  N.  E.  887). 

Willis  V.  Hcalh,  7d  TvX.  12i  (12  8.  \V.  971). 


X) 


Ownership  of  and  Right  to  Sue  on,ljill  or  Note  Indorsed 

ill  Blank. 

Mumford  v.  Weaver,  18  K.  I.  801  (31  A.  1). 

Per  Curiam.  The  defendants  plead  that  the  note  in  suit  is 
the  property  of  one  Maria  S.  Sanders,  a  resident  of  Massachu- 
setts, and  that  the  plaintiff  has  no  interest  in  the  note,  having 
received  it  after  matuiity  and  without  consideration,  and  that  he 
holds  it  as  custodian,  merely,  for  the  purpose  of  collecting  it  and 
paying  the  proceeds  to  the  said  Maria  S.  Sanders.  The  plaintiff 
demurs  to  the  plea.  The  question  thus  presented  for  decision  is 
whether  the  plaintiff  is  entitled,  in  the  circumstances  stated  in 
the  plea,  to  sue  upon  the  note.  We  think  he  is.  The  plea  does 
not  aver  that  the  plaintiff's  possession  of  the  note  is  mala  fide. 
Any  one  in  ])Ossession  of  a  note  indorsed  in  blank  is  prima  facie 
the  holder,  and  may  sue  upon  it,  until  his  riglit  is  disprove<l.  It 
is  no  defense  to  an  action  on  such  pnper  that  the  property  in  it  is 
in  anotiier,  and  not  in  the  plaintiff.  All  that  is  required  of  the 
plaintiff,  in  the  first  instance,  is  to  piesent  the  note;  its  pos- 
session being  prima  facie  evidence  of  his  ownership  of  the  note, 
and  his  right  to  sue.  It  is  only  aftir  the  defendant  has  adduced 
evidence  that  the  note  was  obtained  by  undue  means,  such  as 
fraud,  duress,  theft,  or  the  like,  that  the  plaintiff  is  called  upon 
to  offer  proof  of  oilier  facts  in  sn])port  of  his  title.  2  Pars. 
Notes  &  B.  436  ;  Bank  v.  Senior,  11  11.  J.  37G  ;  Third  Nat.  Bank 
V.  Angell,  Index  O  O,  176  ;  29  All.  500.  The  plaintiff  being  a 
resident  of  Providence,  the  suit  was  properly  brought  in  Provi- 
dence count}-.  Judiciary  Act,  c.  13,  §  2.  The  cases  from  the 
reports  of  the  United  Stales  supreme  court,  cited  by  the  defend- 
ants in  support  of  llie  plea,  hold  merely  tliat  in  determining  the 
question  of  jurisdiction    the  citizenship  of  parties    substantially 

1  Warren  v.  Durfee,  12G  Mass.  338;  Dean  v.  Caruth,  108  Mass.  242; 
Raymond  v.  Sellick  10  Conn.  480;  Phelps  v.  Pond,  23  N.  Y.  69;  Curry  v. 
Powers,  TON.  Y.  212  (2G  Am.  Rep.  577) ;  Blanchard  v.  Williamson,  70111. 
647;  Voorhees  v.  WoodhuU  (4  Vroora)  34  N.J.  L.  482;  Second  Nat. 
Bank  v.  Williams,  13  Mich.  282;  Hamor  v.  Moore,  8  Ohio  St.  239;  Sim- 
mons V.  Cincinnati  Sav.  Soc,  31  Ohio  St.  457  (27  Am.  Rep.  521). 

205 


ILL.   CAS.         TRANSFER  OF  BILLS  AND  NOTES,  ETC.         [cH.  VII. 

interested  in  the  suit,  rather  than  that  of  nominal  parties,  is  to  be 
regarded.  We  do  not  see  that  they  have  any  application  to  the 
question  before  us. 


Effect  of  Assig-nment  of  Xote  without  Delivery. 

Weader  v.  First  Nat.  Bank,  126  lad.  ill  (25  N.  E.  887). 

Berkshire,  C.  J.  The  appellee,  who  was  the  plaintiff  below, 
sued  the  appellant  upon  a  promissory  note  executed  by  him  to 
one  Mary  A.  Reiffel,  and  by  her  indorsed  to  the  appellee  as 
collateral  security.  The  appellee  recovered  judgment.  The 
facts  which  appear  in  the  special  finding  of  the  court,  so  far  as 
we  need  state  them,  to  present  the  one  question  which  we  are 
called  upon  to  decide,  are  about  as  follows:  The  appellee's 
indorser  had,  long  before  the  execution  of  the  note  sued  on, 
executed  her  note  to  one  M.  V.  West,  and  which  bad  matured 
before  the  commencement  of  this  action.  Before  notice  of  the 
assignment  of  his  note  to  the  appellee,  the  appellant  had,  by 
parol,  purchased  the  note  executed  by  the  said  indorser  from  the 
holder  thereof.  The  facts  involved  in  the  transaction  between 
West  and  the  appellant  were  as  follows :  On  the  10th  day  of  July, 
1887,  the  appellant  purchased  said  note,  and  agreed  to  pay  there- 
for the  sum  of  $100,  with  the  privilege  to  the  vendee  of  accept- 
ing meat  (the  appellant  being  a  butcher)  or  cash,  or  both,  at 
his  pleasure,  and  at  the  time  50  cents  was  paid  in  meat, 
but  at  that  time  West  did  not  have  the  note  with  him, 
and  for  that  reason  it  was  not  delivered  to  the  appellant ;  that 
before  the  1st  day  of  November,  1887,  West  had  received  from 
the  appellant  in  meat,  on  account  of  the  purchase  price  of  said 
note,  $20.  On  the  said  1st  day  of  November  the  appellee  noti- 
fied the  appellant  that  it  held  his  said  note,  which  was  the  first 
notice  the  appellant  had  thereof ;  that  on  the  next  day  but  one 
following  West  delivered  to  the  appellant,  pursuant  to  the  pur- 
chase, as  agreed  upon,  the  note  of  the  appellee's  indorser ;  and 
the  question  arises  whether  or  not  the  appellant  was  entitled  to  a 
set-off  oa  account  of  said  last-named  note,  as  against  the  note 
sued  on.  The  trial  court  held,  as  a  conclusion  of  law,  that  the 
right  of  set-off  did  not  exist. 

The  appellant  has  in  his  brief  cited  us  to  no  authority  in  sup- 
port of  his  contention  that  the  appellant  was  entitled  to  the 
benefit  of  the  sel-off  claimed.  In  Waterman  on  Set-Off,  §  55,  it 
is  said  that  the  defendant  may  set  off  a  claim  of  which  he  is  the 
absolute  owner,  although  he  may  not  have  the  strict  legal  title  to 
it.  In  section  104  the  same  author  says  that  where  a  negotiable 
note  is  assigned  for  a  valuable  consideration,  and  an  action  is 
brought  for  the  benefit  of  the  assignee,  in  the  name  of  the  paj^ee, 
the  maker  may  set  off  a  debt  due  to  him  at  the  time  of  the 
assignment  from  the  payee.  At  section  112  the  author  says  that 
when  a  note  or  other  liability  of  the  payee  of  a  note  is  attempted 
206 


CH.  VII.]         TRANSFER  OF  BILLS  AND  NOTES,  ETC.         ILL. 


CAS. 


to  be  set  off  by  the  maker  of  the  note  on  which  the  suit  is  brought, 
as  against  the  assignee,  such  set-off  cannot  be  allowed,  unless  it 
appears  that  the  defendant  was  tlie  owner  of  such  set-off  at  the 
time  he  received  notice  of  the  assignment.  In  McCormick  v. 
Eckland,  11  Ind.  293,  this  court  held  that  an  assignment  of  a 
promissory  note  is  incomplete  without  delivery.  The  case  above 
was  approved  and  followed  in  Wulsclmer  v.  Sells,  87  Ind.  71.  In 
Mendenliall  v.  Baylies,  47  Ind.  575,  it  is  said  tliat,  to  pass  the 
title  to  a  promissory  note,  either  from  the  maker  to  the  payee  or 
from  the  payee  to  an  in<lorser,  there  must  be  a  delivery,  actual 
or  constructive.  Under  the  contract  of  purchase  here  in  question 
no  time  was  fixed  within  which  the  note  was  to  be  delivered  by 
West  to  the  appellant,  and,  until  deliveiy,  there  was  no  transfer 
of  ownership.  The  appellant  was  U')t  in  a  condition  to  maintain 
replevin  for  the  note,  had  West,  upon  demand,  refused  to  assign 
the  note.  The  contract  was  but  an  executory  contract  for  the 
purchase  and  sale  of  the  note.  Had  West,  after  making  the  con- 
tract, brought  suit  against  Mrs.  Reiffei  on  the  note,  she  could  not 
have  made  a  successful  defense  to  the  action  on  the  ground  that 
he  was  not  the  party  in  interest.  Under  our  statute  it  is  not 
necessarj',  to  give  to  the  defendant  the  right  of  set-off  in  an 
action  brought  by  the  assignee  of  a  chose  in  action,  that  he  hold 
the  legal  title  to  the  claim  whicii  he  seeks  the  benefit  of  when  he 
receives  notice  of  the  assignment  of  his  obligation,  but  he  must 
be  the  absolute  owner  thereof.  Section  348  provides  that  "  a 
set-off  shall  be  allowed  only  in  actions  for  money  demands  upon 
contract,  and  must  consist  of  matter  arising  out  of  debt,  duty,  or 
contract,  liquidated  or  not,  held  by  the  defendant  at  the  time  the 
suit  was  commenced,  and  matured  at  or  before  the  time  it  is 
offered  as  a  set-off."  Section  5503 :  "  Whatever  defense  or  set- 
off the  maker  of  any  such  instrument  [referring  to  negotial)le 
paper,  except  such  as  is  protected  by  the  law-merchant]  had 
before  notice  of  assignment  against  the  assignor  or  against  the 
original  payee,  he  shall  have  also  against  the  assignee  "  These 
sections  are  to  be  construed  together.  In  Claflin  v.  Dawson,  58 
Ind.  408,  it  was  held  by  this  court  that  a  set-off  is  a  cross- action 
by  the  defendant  against  the  plaintiff,  in  an  action  by  the  latter 
for  "money  demands  upon  contracts,"  and  the  indebtedness 
upon  which  it  depends  must  be  so  held  by  the  defendant,  at  a  time 
when  he  may  acquire  the  right  of  set-off,  that  he  could  maintain 
an  independent  action  upon  it.  When  the  appellant  received 
notice  that  the  appellee  held  his  note  he  was  not  in  a  position  to 
maintain  an  action  against  Mrs.  Roiffel  on  the  note  she  executed 
to  West.  The  case  of  Shepherd  v.  Turner,  3  McCord,  249,  cited 
by  counsel  for  the  appellee,  involved  the  princt|)le  here  under 
consideration.  The  court  in  that  case  said:  "Something  like  a 
contract  appears  to  have  taken  place  between  the  payee  of  the 
note  and  the  defendant,  and,  to  use  the  language  of  the  judge, 
'  the  defendant  had  the  election  of  taking  the  note  of  that  date.' 
If  he  had  the  election  to  take  he  had  the  right  to  refuse ;  and 

207 


ILL.   CAS.        TRANSFER  OF  BILLS  AND  NOTES,  ETC.         [ciI.  VII. 

that  right  must  have  been  reciprocal.  It  was,  therefore,  at  most, 
a  mere  naked  contract,  and  could  not  have  been  enforced  on 
either  side.  But  even  if  the  contract  had  been  completed  for  a 
valuable  consideration,  as  long  as  it  remained  executory,  and  the 
right  to  the  note  not  changed  by  actual  delivery,  it  was  not  a 
subject  of  set-off.  Debts  to  be  set  off  must  be  mutual,  sub- 
sisting debts  at  the  time  the  action  is  commenced."  See  Osgood 
V.  Artt,  17  West.  Jur.  463.  We  find  no  error  in  the  record. 
Judgment  affirmed,  with  costs. 

Garnishment   of    Bill    or  Note  by  Creditor  of  Payee  or 

Holder. 

WilHs  V.  Heath,  75  Tex.  124  (12  S.  W.  971). 

Gaynes,  J.  Appellants,  being  judgment  creditors  of  R.  H. 
Heath  and  B.  D.  Wilson,  partners,  composing  the  firm  of  Heath 
&  Wilson,  sued  out  a  writ  of  garnishment,  and  caused  it  to  be 
served  upon  appellee.  Appellee  answert-d,  denying  that  he  owed 
the  defendant,  and  that  he  had  any  of  thtir  effects  in  his  posses- 
sion. Appellants  contested  his  answer,  alleging,  in  substance, 
that  after  the  accrual  of  the  indebtedness  of  Heath  &  Wilson  to 
them  B.  D.  Wilson  sold  his  interest  in  the  partnership  effects  to 
his  partner,  R.  H.  Heath,  who,  in  consideration  therefor,  executed 
to  him  four  promissory  notes  for  the  same,  in  the  agreggate  of 
$2,500,  with  the  appellee  as  his  surety  ;  that,  before  the  last  note 
fell  due,  appellee  purchased  of  R.  H.  Heath  the  str re-house 
which  had  formerly  belonged  to  Heath  &  Wilson,  and  the  stock 
of  goods  belonging  to  R.  H.  Heath,  and  in  the  transaction 
assumed  the  payment  of  the  balance  due  upon  the  notes,  which 
amounted  to  $1,735.35,  and  that  for  this  sum  appellee 
executed  to  Mrs.  M.  F.  Wilson,  the  wife  of  B.  D.  Wilson, 
his  promissory  note,  due  two  years  after  date.  This  last 
note  was  alleged  to  have  been  executed  on  the  day 
before  the  judgment  in  favor  of  appellants  against  Heath 
&  Wilson  was  rendered.  It  was  also  alleged  that  at  the 
time  of  its  execution,  R.  H.  Heath  and  B.  D.Wilson  were  insol- 
vent and  that  it  was  made  for  the  purpose  of  hindeiing,  delaying, 
and  defrauding  their  creditors  in  the  collection  of  their  debts. 
The  pleading  contesting  the  answer  was  excepted  to  on  the  ground 
that  the  debt  sought  to  be  reached  was  evidenced  by  a  negotia- 
ble promissory  note,  and  was  therefore  not  subject  to  the  writ  of 
garnishment;  and  the  exception  was  sustained,  and  judgment 
rendered  for  the  garnishee. 

The  allegations  in  appellants'  pleading  must  lie  taken  most 
strongly  against  them,  and  it  must  therefore  be  assumed  that  the 
note  upon  which  the  appellee  is  sought  to  be  charged  is  a  negotia- 
ble instrument.  The  appellants'  counsel,  in  their  brief,  present 
the  case  upon  that  theory,  and  concede  the  general  rule  that  the 
maker  of  a  negotiable  promissory  note  cannot  be  subjected  to  the 

208 


CH.  VII.]         TRANSFER  OF  BILLS  AND  NOTES,   ETC.         ILL.  CAS. 

payment  of  the  same,  under  the  writ  of  garnishment,  before  its 
maturity.  They  claim,  however,  that  the  present  case  is  an  excep- 
tion to  the  rule,  because  the  note  in  controversy  was  made  nego- 
tiable, and  payable  to  Mrs.  Wilson,  for  the  purpose  of  defrauding 
Wilson's  creditors.  We  find  no  authority  for  the  doctrine  for  which 
appellants  contend.  It  is  universally  held  that,  although  ordinarily 
the  garnishee  can  be  held  liable  under  the  writ  only  to  the  extent 
of  his  liability  to  the  debior  of  the  plaintiff,  yet  he  may  be  charged 
with  property  fraudulently  transferred  to  him  by  such  debtor, 
although  the  latter  have  no  cause  of  action  against  him.  This  is 
but  an  ai)plication  of  the  familiar  doctrine  that  a  fraudulent  con- 
versance is  void  as  to  creditors,  although  good  as  between  the 
parties.  This  doctrine  is  applicaViJe  in  a  case  where  the  gar- 
nishee holds  the  effects  of  the  debtor  under  a  fraudulent  assign- 
ment or  tran-fer.  The  maker  of  a  negotiable  promissory 
instrument  is  not  subject  to  be  charged  by  a  writ  of  garnishment, 
because,  if  this  be  done,  he  is  liable  to  be  made  to  pay  the  same 
debt  twice  over;  and  we  find  no  authority  for  holding  that  the 
rule  is  different  when  he  executes  the  note  with  the  knowledge 
that  it  is  tlie  purpose  of  the  paree  to  place  the  fund  beyond  the 
reach  of  his  creditors.  We  think  theie  would  be  as  much  reason 
for  holding  one  who  pays  a  debt,  knowing  that  the  person  to 
whom  it  is  paid  intends  to  withhold  it  of  his  creditors.  If  the 
maker  of  a  promissory  note  may  be  charged  in  garnishment, 
before  its  maturity,  on  tiie  ground  that  he  knew  when  he  exe- 
cuted it  that  it  was  the  purpose  of  the  payee  to  place  the  fund 
beyond  the  reach  of  his  creditors,  we  see  no  leason  why  one  who 
pays  a  debt  with  a  knowledge  of  a  like  intent  on  part  of  his  cred- 
itor may  not  be  compelled  to  pny  again,  at  the  suit  of  the  cred- 
itors of  him  to  whom  he  has  made  the  payment.  The  giving 
of  a  negotialiie  promissory  note  is  a  mode  of  paj'inent. 
The  case  of  Wood  v.  Bodwell,  12  Pick.  268,  is  in  point, 
and  holds  that  the  maker  of  a  negotiable  instrument,  under  such 
circumstances,  is  not  subject  to  be  charged  under  the  writ  of 
garnishment.  In  States  where  the  s'atute  permit  the  garnish- 
ment of  a  debt  evidenced  by  negotiable  instruments,  a  different 
rule  may  prevail.  So,  also,  if,  after  the  maturity  of  a  note,  it  be 
shown  that  it  is  in  tlie  hands  of  one  who  has  received  it  with  a 
knowledge  that  the  payee  hnd  transferred  with  intent  to  defraud 
bis  creditors,  the  maker  may  be  held  chargeable.  There  a  differ- 
ent principle  a[)i)lies.  We  conclude  that  appellee  was  not 
chargeable  in  this  case.  We  have  treated  the  transaction  as  if 
the  note  had  been  payable  to  B.  D.  Wilson,  instead  of  his  wife. 
We  find  no  error  in  the  action  of  the  court  allowing  the 
garnishee  an  attorney's  fee  for  preparing  his  answer.  In  John- 
son V.  Blanks,  68  Tex.  405  ;  4  S.  W.  Rep.  557,  we  held  that  such 
an  allowance,  in  such  a  case,  was  proper,  and  that  an  amount 
fixed  by  the  court,  in  ihe  ab-^ence  of  testimony  showing  that  it 
was  too  much,  would  be  deemed  conclusive.  We  find  no  error 
in  the  judgment,  and  it  is  affirmed. 

H  200 


CHAPTER    VIII. 

TRANSFER  BY  INDORSEMENT, 

Section   83.  Thg  meaning,  purpose  and  effect  of  indorsement. 

84.  Liability  of  an  indorser. 

85.  Liability  of  indorser  '*  without  recourse." 

86.  Successive    indorsements  —  Liability    for    contribution 

and  exoneration. 

87.  The  place  for  indorsement — Allonge. 

88.  Form  of  the  indorsement. 

89.  Indorsements  in  full  and  in  blank. 

90.  Absolute,  conditional  and  restrictive  indorsements. 

91.  Time  and  place  of  indorsement. 

92.  Irregular  indorsemen's—  Joint  makers,  grantors, 

indorsers. 

§  83.  The  meaning,  purpose  and  effect  of  indorse- 
ment.—  The  literal  meaning  of  indorsement  is  writing  on 
the  back,  derived  from  the  latin  indorsa.  But  in  this  con- 
nection, the  word  is  used  to  indicate  a  legal  transaction, 
effected  l)y  a  writing  of  one's  name  on  the  back,  whereby 
one  not  only  transfers  one's  full  legal  tille  to  the  paper 
transferred,  but  likewise  enters  into  an  implied  guaranty 
that  the  primary  obligor,  thi;  maker,  drawer  or  acceptor,  as 
the  case  may  be,  will  duly  pay  the  amount  of  money  called 
for  by  the  paper,  if  it  is  duly  i)resented  for  payment  at  the 
day  of  its  maturity ;  and  if  it  be  a  bill,  if  it  is  duly  pre- 
sented at  the  proper  time  for  acceptance,  as  well  as  for 
payment.  The  indorsement  then  Ms  of  a  dual  character. 
It  is,  first,  the  means  of  effecting  a  legal  transfer  of 
the  title  to  the  bill  or  note,  which  is  indorsed;  q.\-\(\ secondly , 
a  guaranty  that  it  will  be  duly  honored.  The  second  phase 
of  the  indorsement  makes  it  an  executory  contract,  and 
in  order  that    it    may    be  enforceable,  it    must    be     sup- 

1  As  to  irregular  indo'sements,  see  j)os(,  §  92. 

210 


CH.   VIII.]  TRANSFER    BY    INDORSEMENT.  §   83 

ported  by  a  valuable  consideration.^  As  a  means  of  trans- 
fer of  title  to  the  bill  or  note,  it  is  valid  as  between  the 
parties  to  the  indorsement  without  any  consideration, 
although  it  is  presumed  to  have  been  made  for  a  con- 
sideialion.'^ 

Delivery  of  the  [):iper,  and  its  acceptance  by  the  indorsee, 
are  essential  to  a  complete  indorsement,  and  these  facts 
are  implied  in  the  allegation  of  indorsement.  Until  there 
has  been  a  delivery  and  acco^jtance,  the  mere  writing  of 
the  payee's  or  indorsee's  name  on  the  back  of  a  bill 
or  note,  does  not  constitute  a  complete  indorsement.^  A 
regular  indorsement  can  only  be  made  by  one  who  is 
entitled  to  receive  payment,  either  as  original  payee  or  in- 
dorsee. 

As  has  been  already  stated  in  the  ])receding  chapter* 
where  a  negotiable  paper  is  payable  to  bearer,  full  legal 
title  may  be  transferred  without  indorsement,  and  by 
delivery  only.  But  where  the  bill  or  note  is  payable  to 
oi'der,  while  tlie  equitable  or  incomplete,  though  substan- 
tial, title  may  pass  by  delivery  only  ;  the  full  legal  title, 
together  with  the  superior  character  and  rights  of  a  6o?irt 
^(?e  holder,  can  be  aecjuiied  by  a  transferee  only  when  the 
bill  or  note  is  transferred  by  indorsement.^  While  in- 
dorsement i-<  not  necessary  to  the  transfer  of  the  full  legal 

•  McKnight  r.  Wlieelt  r,  G  Hill,  492;  Moriden  Steam  Mill  v.  Guy,  40 
Conn.  103;  Morrison  v.  Lovell,  4  W.  Va.  34(i;  McPhersoar.  Westou,  64 
Cal.  275;  Freeraiin  v.  Blufihara,  Co  G;i.  580;  Sinker  v.  Fletcher,  GI  Ind. 
276;  National  Bauk  v.  Green,  33  Iowa,  140. 

'  Weston  V.  Ili-^ht,  17  Me.  287  (35  Am.  Dec.  250);  Duuu  v.  Morris,  24 
Conn.  333;  Fredericks.  Wlnaus,  51  Wis.  472  (8N.  W.301);  Hinkley  r. 
Fourth  Nat,  Bank,  77  Iiul.  475;  Luning  v.  Wise,  G4  Cal.  410. 

8  Laird  v.  D.ivid*on,  124  Ind.  412  (25  N.  E.  7);  Goodwin  v.  Daven- 
port, 47  Me.  112  (74  Am.  Dec.  478);  Wulschner  v.  Sells,  87  Ind.  71; 
Spencer  v.  Car.slarphen,  15  Colo.  445  (24  V.  882);  Clark  v.  Boyd,  2  Ohio, 
50;  Kittle  v.  DeLaniatcr,  3  Neb.  3-'5;  Cooper  t7.  Nock,  27  111.  301; 
Middle'on  v.  Giiiruh,  57  N.  J.  L.  442;   31  A.  405. 

■•  Sec  ante,  §  75. 

*  Blukely  v.  Grant,  G  Mass.  38G;  Rand  v.  Dovey,  83  Pa.  St.  280;  Diy- 
d.  n  r.  Brilton,  19  Wis.  22;  Wade  v.  Guppinger,  GO  Ind.  377.  Biitsrt- 
aihtrti,  n\i\cr  local  .-statute,  Security  Bank  r.  Luca.>^  (Minn.  '97),  71  N.  W. 
822. 

211 


§   83  TRANSFER    BY    INDORSEMENT.  [CH.  VIII. 

title  of  a  bill  or  note,  which  is  payable  to  bearer,  unless 
the  local  statute  provides  to  the  contrary, ^  if  such  paper  is 
iictuiilly  indorsed,  the  indorser  assumes  towards  the  sub- 
sequent holders  of  the  paper  the  same  liability,  which  he 
sustains  in  his  indorsement  on  paper  which  is  payable  to 
older. '^ 

Where  the  paper  is  non-negotiable,  there  is,  generally 
speaking,  no  room  for  the  application  of  the  principles  of 
indorsement.  But,  although  it  has  been  held  in  some  cases, 
that  the  indorser  of  a  non-negotiable  bill  or  note  does  not 
assume  any  liability  as  a  guarantor,  unless  he  has  made  the 
indorsement  "  with  recourse,"  or  has  expressly  indicated 
in  some  other  way  his  intention  to  assume  the  liability  of 
an  indorser  ;  ^  it  is  generally  held  that  the  implied  liability 
of  an  indorser  will  attach  in  such  a  case,  at  least  in  favor 
of  the  immediate  indorsee  or  transferee.* 

It  is  also  held  that  the  indorsement  of  a^on-negotiable 
instrument  is  an  absolute  guaranty  of  payment,  and  not 
dependent  upon  prior  presentment  and  notice  of  dishonor.^ 
And  so  absolutely  independent  of  the  original  contract  is 
in  such  a  case  the  contract  of  indorsement,  that  the  indorser 
of  a  non-negotiable  instrument  cannot  be  joined  in  the  same 

1  In  some  States,  the  statutes  require  indorsement  whether  the  paper 
be  payable  to  bearer  or  order.  Garvin  v.  Wiswell,  83  III.  215;  Blacliman 
V.  Lehman,  63  Ala.  547  (35  Am.  Rep.  57). 

2  Gilbert  v.  Nantucket  Bank,  5  Mass.  97;  Brush  v.  Reeves,  3  Johns. 
435;  Smith  v.  Rawson,  61  Ga.  208;  Johnson  v.  Mitchell,  50  Tex.  213  (.32 
Am.  Rep.  602). 

3  Klein  v.  Keiser,  87  Pa.  St.  485;  Cromwell  v.  Hewitt,  40  N.  Y.  491 
(100  Am.  Dec.  527);  Story  v.  Lamb,  52  Mich.  525;  Merchants'  Nat.  Bank 
V.  Gregg  (Mich.,  96),  64  N.  W.  1052;  Whisler  v.  Bragg,  31  Mo.  124;  Sam- 
stag  V.  Conley,  64  Mo.  476. 

4  Jones  V.  Fales,  4  Mass.  245;  Raymond  v.  Middleton,  29  Pa.  St.  529; 
Ransom  V.  Sherwood,  26  Conn.  437;  Parker  v.  Riddle,  11  Ohio,  102;  Wil- 
son V.  Ralph,  3  Iowa,  450;  Lynch  v.  Mead  (Iowa),  68  N.  W.  579;  Carruth 
V.  Walker,  8  Wis.  103  (76  Am.  Dec.  235) ;  Castle  v.  Candee,  16  Conn.  223 ; 
Gilbert  v.  Seymour,  44  Ga.  63;  Seymour  v.  Van  Slyck,  8  Wend.  403; 
Cromwell  v.  Hewitt,  40  N.  Y.  491  (100  Am.  Dec.  527)  ;  Snyder  v.  Oatman, 
16  Ind.  265. 

*  See  cases  in  preceding  note.  But  see  contra,  Sutton  v.  Owen,  65 
N.  C.  123. 

212 


CH.  VIII.]  THANSFER    BY    INDORSE3IENT.  §   84 

action  with  the  maker  of  the  note,  or  acceptor  of  a  bill, 
as  can  be  done  where  the  paper  is  negotiable.^ 

But  in  order  that  one  may  indorse  a  non-negotiable  paper 
and  therel)y  assume  the  implied  liability  of  an  indorser,  the 
paper  must  be  qnasi-negoivdhle;  i.  e.  it  must  be  of  the 
general  character  of  a  bill,  note  or  check,  and  lacking  onl\ 
one  or  more  of  the  requisites  of  negotiability.  For  exam- 
ple, one  does  not  assume  the  liability  of  an  indorser  by 
indorsing  a  judgment. ^ 

Finally,  an  indorsement,  in  order  that  it  may  have  the 
technical  effect  of  an  indorsement,  must  be  full  and  com- 
plete. It  cannot  be  partial.  An  indorsement  to  one,  of  a 
part  of  the  amount  called  for  by  the  bill  or  note,  can  only 
operate  as  an  assignment  ^?*o  taiito  of  the  paper,  and  such 
assignee  cannot  claim  the  superior  character  of  a  bona  fide 
holder.^  But,  as  a  matter  of  course,  the  bill  or  note  may 
be  indorsed  to  two  or  more  jointly,  each  acquiring  an 
aliquot  share  in  the  paper,  but  they  must  sue  jointly.^ 
And  so,  also,  there  may  be  an  indorsement  in  full  to  a 
third  person,  with  a  collateral  agreement  that  the  indorsee 
is  to  hold  a  part  of  the  money  due  on  the  paper  in  trust  for 
the  indorser  or  some  third  person,  without  affecting  the 
character  of  the  indorsement.^ 

§  84.  Liability  of  an  indorser. —  As  already  stated, 
indorsement  has  a  dual  legal  character:  fivnt,  it  is  the 
means  of  transferring  title  to  the  bill  or  note  which  is  in- 
dorsed ;  secondly^  it  is  an  implied  contract  of  guaranty  on 
the  part  of  the  indorser.  In  this  connection,  the  latter 
phase  of  the  indorsement  will  be  considered.     We  are  to 

'  Cochran  v.  Strong,  44  Ga.  036;  First  Nat.  Bank  of  Trenton  v.  Gay, 
71  Mo.  G27. 

2  Kelsey  v.  McLaughlin,  76  Ind.  379. 

3  Ilughe-s  V.  Kiddell,  2  Bay,  324;  Fordyce  v.  Nelson,  91  111.  447;  Frank 
V.  Kaigler,  30  Tex.  305;  Hutchinson  v.  Simon,  57  Miss.  628;  Scott  v. 
Liddell,  98  Gi.  24  (25  S.  E,  935). 

♦  Flint,  V.  Flint,  6  Allen,  34  (83  Am.  Dec.  615)  ;  Nat.  Exch.  Bank  v.  Silli- 
man,  (!5  N.  ¥.475;  Conover  v.  Earl,  26  Iowa,  167;  Herring  v.  Woodhull, 
29  ir.  92  (81  Am.  Dec.  200). 

«  Reid  V.  Furniva!,  1  C.  &  M    538;   5  C.  &  P.  499. 

213 


§   84  TRANSFER    BY    INDORSEMENT.  [CH.  VIII. 

determine  the  scope  and  limitations  of  the  liability  of  the 
indor&er  as  a  guarantor  or  warrantor. 

Naturally,  the  indorser  would  be  bound  by  the  same 
Avarranties,  which  are  imposed  by  law  on  the  transferrer  of 
paper  payable  to  bearer.  The  indorser  impliedly  warrants 
that  the  prior  parties,  including  drawer  and  acceptor  of  a 
bill,  the  maker  of  a  note,  and  the  indorsers  of  both,  were 
competent  to  contract,^  that  the  signatures  of  all  the  prior 
parties  to  the  paper  are  genuine  and  that  he  has  a  legal  title 
to  the  paper, 2  and  that  the  bill  or  note  is  legal  and  does  not 
violate  any  law,  such  as  the  law  against  usury  or  gambling.^ 

In  addition,  however,  to  these  implied  warranties,  which 
are  imposed  alike  upon  the  indorser  and  the  transferror  of 
paper  payable  to  bearer,  the  indorser  guarantees  that  the 
instrument  will  be  honored  by  the  original  [jarties  at  ma- 
turity, if  duly  presented  for  payment;  and,  if  it  be  a  bill, 
that  it  will  l)e  accepted  when  it  is  presented.  But  in 
either  case,  the  intlorser  is  not  lial)le  unless  notice  of  dis- 
honor is  given  to  him  by  the  holder  within  the  time 
required.  The  guaranty  of  the  indorsement  is  conditional 
upon  the  presentment  and  notice,  and,  if  it  is  a  case  for 
protest,  upon  the  making  of  the  proper  protest.^ 

1  Bowman  v.  Hiller,  130  Mass.  153  (39  Am.  Rep.  442)  ;  Erwin  v.  Downs, 
15  N.  Y.  575;  Turner  v.  Keller,  66  N.  Y.  66;  Robertson  v.  Allen,  69 
(9  Heisk.)  Teun.  233. 

2  Terry  v.  Bissell,  26  Conn.  23 ;  Onondaga  Co.  Sav.  Bk.  v.  United 
States,  64  Fed.  703;  12  C.  C.  A.  407;  Chapman  v.  Rose,  56  N.  Y.  137  (15 
Am.  Rep.  401)  ;  Colsou  v.  Arnot,  57  N.  Y.  253  (15  Am.  Rep.  496)  ;  Condon 
V.  Pearce,  43  Md.  83;  Howe  v.  Merrill,  5  Cush.  80;  Fisli  v.  First  Nat. 
Bank,  42  Micli.  203;  Cochran  v.  Atchison,  27  Kan.  728;  Dumont  w.  Wil- 
liamson, 18  Ohio  St.  515  (98  Am.  Dec.  186)  ;  Rhodes  v.  Jenkins,  18  Colo. 
49  (31  P.  491;  an  irregular  indorser). 

3  Railroad  Co.  v.  Schulte,  103  U.  S,  118;  Burrill  v.  Smith,  7  Pick.  291; 
Nat.  Bank  of  Pittsburg  v.  Wheeler,  60  N.  Y.  612;  Stewart  v.  Bramhall, 
74  N.  Y.  85;  Huston  v.  First  Nat.  Bank,  85  Ind.  21;  Watson  v.  Cheshire, 
18  Iowa,  202  (87  Am.  Dec.  382);  Fishy.  First  Nat  Bk.,  42  Mich.  203; 
Ward  V.  Doane,  77  Mich.  328  (43  N.  W.  980 ;  but  indorsee  must  not  know 
of  the  illegality). 

4  Ogden  v.  Saunders,  12  Wheat.  313;  Ray  v.  Smith,  17  Wall.  411; 
Field  V.  Nickerson,  13  Mass.  131;  Cutler  v.  Parsons,  13  App.  Div.  376 
(43  N.  Y.  S.  187);  Disborough  v.  Vanness,  7  N.  J.  L.  (3  Hal.)  231; 
Freeman  w.  O'Brien,  38   Iowa,  406;  Clark  u.  Trueblood  (Ind.  App.  '97), 

214 


CH.  VIII.]  TUANSFEIt    liY    INDOKSEMENT.  §   85 

But  the  warranties,  which  are  common  to  indorsements 
and  transfers  without  indorsement,  are  absolute  and  not 
conditional  upon  presentment,  protest  and  notice.^ 

§  85.   Liability    of  indorser  "without    recourse. —  An 

indorser  m;iy  by  express  agreement  relieve  himself  of  lia- 
bility for  the  dishonor  of  the  bill  or  note,  which  he  has 
indorsed,  by  inserting  in  the  indorsement  a  qualification 
of  his  liability.  Any  words,  expressive  of  the  agreement, 
would  be  sufiicient  ;  but  this  qualification  of  his  liability  is 
usually  indicated  by  the  addition  to  the  imlorsement  of  the 
words  "  without  recourse."  When  an  indorsement  is 
made  "  without  recourse,"  the  indorser  is  not  liable,  if 
the  primary  obligor  does  not  honor  the  paper  :it  maturity. 
Although,  in  commercial  circles,  an  indorsement  "  without 
recourse"  lowers  the  marketable  value  of  the  paper,  it 
does  not  in  law  raise  any  presumption  as  to  the  financial 
responsibility  of  the  parties,  or  cast  any  suspicion  upon  the 
legal  character  of  the  paper. ^  But  an  indorsement  **  with- 
out recourse  "  does  not  relieve  the  indorser  from  anything 
but  his  implied  guaranty  that  the  paper  will  be  duly  hon- 
ored. He  is  still  bound  by  the  implied  warranties  of  the 
competency  of  the  parties,  genuineness  and  legality  of  the 
instrument  and  the  validity  of  his  own  title  to  it.^ 

44  N.  E.  679;  Chapman  v.  McCrea,  G3  Ind.  3G0;  Selover  v.  Snively,  24 
Kan.  672;  Evans  v.  Baker  (Kan.  App.  '97),  47  P.  314;  Crim  v.  Stark- 
weather, 88  N.  y.  339  (42  Am.  Rep.  250);  Allin  v.  Williams,  97  Cal.  403 
(32  P.  441);  State  Sav.  Bank  v.  Baker,  93  Va..510  (25  S.  E.  550).  See 
succeeding  chapters  X,  XI,  XII  on  Presentment  for  Paper,  Protest  and 
Notice. 

*  Copp  u.  McDougall,  9  Mass.  1;  Cochran  v.  Atchison,  27  Kan.  728. 
But  see  in  this  connection,  Susquehanna  Val.  Bank  v.  Loorais,  85  N.  Y. 
207  (39  Am.  Rep.  652). 

2  Wilson  V.  Codman's  Exrs.,  3  Cranch,  195;  Welch  v.  Lindo,  7  Cranch, 
159;  Fitchburg  Bank  v.  Greenwood,  3  Allen,  434;  Stevenson  v.  O'Neill, 
71  111.  314;  Bevan  v.  Fitzsimraons,  40  111.  App.  108;  Borden  v.  Clark,  26 
Mich.  410;  Mott  v.  Hicks,  1  Cow.  513  (13  Am.  Dec.  550);  Fassin  v.  Hub- 
bard, 55  N.  Y.  465;  Kelley  v.  Whitney,  45  Wis.  110  (30  Am.  Rep.  697); 
Lawrence  v.  Dobyns,  30  Mo.  190;  Cross  v.  Ilollister,  47  Kan.  652  (28  P. 
693). 

3  Ticonic  Bank  v.  Smiley,  27  Me.  225  (46  Am.  Dec.  593);  Frazer  v. 

215 


§   86  TRANSFER   BY   INDORSEMENT.  [CH.  VIII. 

§  86.  Successive  indorsements  —  Liability  for  contribu- 
tion and  exoneration. —  Indorsers  guarantee  the  payment 
of  the  instruments  to  all  subsequent  indorsees,  and  for  that 
reason  they  are  liable  in  case  of  non-payment  in  the  order 
in  which  their  indorsements  were  made,  each  indorser 
being  liable  for  the  whole  amount  of  the  bill  or  note  to 
every  subsequent  indorsee,  but  not  to  the  prior  indorsers. 
The  indorsements  are  presumed  to  have  beeu  made  in  the 
order  in  which  they  appear  on  the  paper.  But,  as  between 
themselves,  i.  e.,  between  the  immediate  indorsers  and 
indorsees,  the  order  may  be  changed  by  special  agreement; 
or  it  may  be  shown  by  parol  evidence  that  the  actual  order 
of  indorsement  was  different  from  what  it  appears  on  the 
bill  or  note.  Unless  the  parties  have  made  an  agreement 
to  the  contrary,  each  indorser  is  liable  in  solido  to  the  suc- 
cessive subsequent  indorsees,  and  any  one  or  more  of  them 
may  be  sued  in  the  same  action.  The  holder  cannot  be 
required  to  join  them  all.^ 

If  two  indorsers  appear  on  the  face  of  the  paper  to  have 
been  joint  payees  or  indorsees,  their  indorsements,  although 
apparently  successive,  are  really  joint ;  and  if  one  pays  the 
note  or  bill,  he  will  have  contribution  from  the  other,  to 
the  extent  of  one-half,  unless  a  special  agreement  to  the 

D'Invilliers,  2  Pa.  St.  200;  Dumont  v.  Williamson,  18  Ohio  St.  516  (98 
Am.  Dec.  186);  Brown  v.  Ames,  61  N.  W.  448;  59  Minn.  476;  Watson  v. 
Clieshire,  10  Iowa,  202  (87  Am.  Dec.  382);  Challis.u.  McCrum,  22  Kan. 
157  (31  Am.  Rep.  181);  Ware  v.  McCormack,  96  Ky.  139  (28  S.  W.  959); 
Drennan  v.  Bunn,  124  111.  175  (16  N.  E.  100);  Hecht  v.  Batcheller,  147 
Mass.  335  (17  N.  E.  651);  Spencer  v.  Halpern,  62  Ark.  595  (37  S.  W. 
711). 

1  McCarty  v.  Roots,  21  How.  437;  Germania  Bank  v.  Follette,  72  Fed. 
145;  Shaw  v.  Knox,  98  Mass.  214;  Kirschner  v.  Conklin,  40  Conn.  77; 
Easterly  v.  Barber,  66  N.  Y.  433;  Wolf  v.  Hostetter,  182  Pa.  St.  292  (37 
A.  988);  Slack  v.  Kirk,  67  Pa.  St.  380  (5  Am.  Rep.  438)  ;  Bank  of  U.  S.  v. 
Beirne,  1  Gratt.  234  (42  Am.  Dec.  551);  Willis  v.  Willis,  42  W.  Va.  522 
(26  S.  E.  515);  Davis  v.  Morgan,  64  N.  C.  576;  Camp  v.  Simmons,  62  Ga. 
73;  Givens  «  Merchants'  Nat.  Bank,  85  111.  442;  Williams  v.  Merchants' 
Nat.  Bank,  67  Tex.  606  (4  S.  W.  163);  Hale  v.  Danforth,  46  Wis.  554 
(1  N.  W  284);  Freeman  v.  Ellison,  37  Mich.  459;  Sweet  v.  Woodin,  72 
Mich.  393  (40  N.  W.  471) ;  Holmes  v.  First  Nat.  Bank,  38  Neb.  326  (56  N. 
W.  1011). 

216 


CH.  VIII.]  TRANSFER   BY    INDORSEMENT.  §  87 

contrary  is  shown. ^  Where  two  successive  indorsees  are 
not  joint  payees  or  indorsees,  while  the  presumption  is 
that  they  are  successive  indorsers,  parol  evidence  is  admis- 
sible to  prove  that  they  were  in  fact  joint  indorsers,  in 
order  to  establish  the  claim  of  contribution  of  one  from  the 
other. ^ 

Where  the  bill  or  note  is  indorsed  by  the  payee,  and 
by  one  who  is  otherwise  a  stranger  to  the  obligation,  it  is 
presumed  that  the  indorsement  of  the  payee  is  prior  in 
point  of  time  to  the  latter's  indorsement.  But  if  the  latter 
is  in  fact  the  prior  indorsement,  this  may  be  shown  by 
parol  evidence,  in  order  to  determine  the  liability  of  one  to 
the  other,  but  not  to  affect  the  rights  of  the  bona  fide 
holder  against  either.^ 

§  87.   The    place     for    indorsement  —  Allonge.  —  Of 

course  the  proper  place  for  an  indorsement  is  on  the  back 
of  the  bill,  note  or  check ;  for  the  literal  meaning  of  indorse- 
ment is  writinsj  on  the  back.  But  in  order  that  a  sigruature 
and  other  accompanying  writing  may  have  the  full  effect  of 
an  indorsement,  if  made  by  the  proper  party,  it  is  not 
necessary  that  it  be  put  on  the  back  of  the  paper.  It  may 
be  written  anywhere  else  on  the  paper;  but  in  that  case,  it 
must  be  shown,  in  case  of  dispute,  to  have  been  written  as 
an  indorsement.  But  a  signature  or  other  signed  written 
transfer  of  paper,  which  does  not  appear  on  some  part  of 
the  bill  or  note,  is  not  an  indorsement,  although  it  would 
operate  as  an  effective  assignment  of  the  paper.*     Where, 

1  Lane  v.  Stacey,  8  Allen,  41 ;  Hagerthy  v.  Phillips,  83  Me.  336  (22  A. 
223);  Hull  v.  Meyers,  90  Ga.  674;  16  R.  E.  653;  Vaa  Patten  v.  Ulrich,  59 
Hun,  628.     But  see  Palmer  v.  Field,  76  Hun,  229. 

«  Mulcare  v.  Welch,  160  Mass.  58  (35  N.  E.  97) ;  Slack  v.  Kirk,  67  Pa.  St. 
380  (5  Am.  Rep.  438) ;  Slagle  v.  Rust,  4  Gratt.  274;  Giveus  v.  Merchants' 
Nat.  Bank,  85  111.  442;  Hale  v.  Danforth,  46  Wis.  554  (1  N.  W.  284). 
But  see  contra,  Johnson  v.  Ramsey,  4'i  N.  J.  L.  279  (39  Am.  Rep.  580). 

»  McCarly  v.  Roots,  21  How.  437;  Shaw  v.  Knox,  98  M  iss.  214  ;  Kir.^ch- 
D'  r  u.  Conklin,  40  Conn.  77;  Hubbard  v.  Guernsey,  64  N.  Y.  457;  SllUwell 
V.  How,  46  Mo.  589;  Hogue  v.  Davis,  8  Gratt.  4;  Cady  v.  Sheppard,  12 
Wis.  713;  Moody  V.  Findley,  43  Ala.  167. 

*  Com.  V.  Butlerick,  100  Mass.  1  (97  Am.  Dec.  65);  Haines  v   Dubois, 

217 


§   88  TRANSFER    BY    INDORSEMENT.  [CH.  VIII. 

however,  by  the  frequent  and  numerous  transfers  of  the 
paper,  the  entire  avaihible  space  on  the  back  has  been 
exhausted  in  writing  the  successive  indorsements,  a  piece 
of  paper  may  be  attached  to  the  bill  or  note  by  mucilage 
or  otherwise,  and  all  additional  indorsements  may  be 
written  on  this  attached  paper.  The  attached  paper  is 
called  an  allonge  and  becomes  a  pari  of  the  instrument.^ 

§  88.  Form  of  the  indorsement.  —  An  absolutely  essen- 
tial element  in  every  indorsement  is  the  signature  of  the 
party  who  has  the  right  to  transfer  the  paper,  and  who 
intends  by  such  indorsement  to  transfer  the  title  to  the  bill 
or  note.  The  full  name  should  be  given  in  the  signature, 
and  it  is  usual  to  do  so,  but  the  initials  would  suffice. ^ 
But  it  is  really  not  necessary  for  the  person  who  has  the 
right  to  transfer  the  paper  to  use  his  customary  signature. 
Any  writing  which  was  intended  by  such  a  party  as  a  sig- 
nature, would  be  sufficient.  Thus,  the  figures  "  1,  2,  8  " 
placed  on  the  back  of  a  bill  or  note,  with  the  intention  of 
transferring  title,  was  held  to  be  sufficient  to  bind  the 
transferrer  as  an  indorser.^ 

If  the  indorsement  does  not  consist  simply  of  the  sig- 
nature, it  is  usually  accompanied  by  the  words  "pay to  A. 
or  order,*  or  "  pay  to  the  order  of  A."  But  it  is  not 
necessary  to  adopt  this  formula.  As  will  be  explained 
more  fully  in  the  next  section,  a  simple  signature  of  the 
payee  or  indorsee  is  sufficient;  and  where  one  desired  to 
limit  or  qualify  the  indorsement,  others  such  as  "  assigns," 

30  N.  J.  259;  Arnott  v.  Symonds,  85  Pa.  St.  99  (27  Am.  Rep.  630); 
Quia  V.  Sterne,  26  Ga.  223  (71  Am.  Dec.  204) ;  Shaia  v.  Sullivan,  106  Cal. 
208  (39  P.  606);  Maniou  Gravel  Road  Co.  v.  Kessinger,  66  lad.  553; 
Herring  v.  Woodhull,  29  111.  92  (81  Am.  Dec.  296);  Gorman  v. 
Ketchum,  33  Wis.  427. 

1  Folger  V.  Chase,  18  Pick.  63;  Crosby  v.  Roub,  16  Wis.  616  (84  Am. 
Dec.  720);  Fountain  v.  Bookstaver,  141  111.  461  (31  N.  E.  17). 

2  Merchants'  Bank  v.  Spicer,  6  Wend.  443;  Rogers  u.  Colt,  6  Hill,  322; 
Corganv.  Frew,  39  111.  31  (89  Am.  Dec   2SG). 

3  Brown  u.  Butchers'  and  Drovers'  Bank,  6  Hill,  443  (41  Am.  Dec.  755). 
See  to  same  effect,  Flint  v.  Flint,  6  Allen,  34  (83  Am.  Dec.  615). 

*  Or  bearer. 

218 


CH.  VIII.  ]  TRANSFER    BY    INDORSEMENT.  §   89 

("to  A  or  his  assigns  ")  would  answer  just  as  well,  pro- 
vided language  is  not  employed,  which  limits  the  liability  of 
the  transferrer.  The  transferrer  is  liable  in  any  of  these 
cases  as  an  indorser.^  But  there  must  be  words  of  trans- 
fer.     A  guaranty  is  not  a  good  indorsement.^ 

§  89.  Indorsements  in  full  and  in  blank. —  When  iin 
instrument  is  made  payable  by  indorsement  to  A  or  order, 
or  to  the  order  of  A,  it  is  called  an  indorse7nent  in  fidl ,  and 
no  one  but  the  indorsee  named  can  demand  payment,  unless 
lie  in  turn  indorses.  While  it  is  proper  for  words  of 
negotiability  to  be  inserted  in  the  indorsement,  their 
absence  from  the  indorsement  will  not  destroy  the  further 
negotiability  of  the  pai)er,  as  long  as  they  are  inserted  in 
the  body  of  the  instrument.^ 

Where  the  payee  or  indorsee  writes  only  his  name  on  the 
back  of  the  bill  or  note,  it  is  called  an  indorsement  in 
blank;  and  as  long  as  it  remains  in  that  condition,  the 
instrument  is  transferable  by  delivery,  as  if  it  was  origi- 
nally payable  to  bearer.  But  the  subsequent  transferee 
ir.ay  fill  up  the  prior  blank  indorsement,  by  making  it  pay- 
able to  the  order  of  himself  or  of  some  one  else,  to  whom 
he  proposes  to  deliver  it,  and  thereby  make  it  an  indorse- 
ment in  full.*     And  where  there  are    successive   indorse- 

1  Sears  w.  Lantz,  47  Iowa,  G58;  Shelby  v.  Jadd,  24  Kan.  161;  Walker 
V.  Krebaum,  67  111.  252.  See  Aniba  v.  Yeomans,  39  Mich.  171,  and  mite, 
§85. 

2  Trust  Co.  V.  Nat.  Bank,  101  U.  S,  68.  But  see  contra,  Meitz  v. 
Wolfe,  28  Neb.  500  (44  N.  W.  485^ ;  Buck  v.  Davenport,  29  Neb.  407  (45 
N.  W.  77G)  ;  Packer  v.  Wetherell,  44  111.  App.  95.  And  see  Brothertou 
V.  Street,  124  Ind.  599  (24  N.  E.  10G8)  ("  sign"  held  to  be  sufficient) ; 
Maine  Trust  &c.  Co.  v.  Butler,  45  Minn.  506  (48  N.  W.  333)  (assign 
sufficient);  Marks  v.  Corey  (Mich.),  66  N.  W.  493  (assign  is  sufficient); 
Derry  v.  Holman,  27  S .  C.  621  (2  S.  E.  84 1,  do) . 

3  Potter  V.  Tyler,  2  Met.  58;  Leavitt  v.  Putnam,  3  N.  Y.  494  (53  Am. 
Dec.  322);  Reamer  v.  Bell,  79  Pa.  St.  292;  Muldrowv.  Caldwell,  7  Mo.  563. 

4  Evans  v.  Gee,  11  Pot.  80;  Central  Bank  v.  Davis,  19  Pick,  374;  Con- 
don V.  Pearce,  43  Md.  83;  Phelps  v.  Church,  65  Mich.  231  (32  N.  W.  30)  ; 
Morris  v.  Preston,  93  111.  215;  Everett  v.  Tidball,  34  Neb.  803  (52  N.  W. 
816);  Andrews  ».  Simms,  33  Ark.  771;  Farr  v.  Ricker,  46  Ohio  St.  265 
(21  N.  E.  354);  Johnson  v.  Mitchell,  50  Tex.  212  (32  Am.  Rep.    602); 

219 


§   90  TRANSFER    BY    INDORSEMENT.  [cil.   VIII. 

lueuts  in  blank,  the  holder  may  make  any  one  of  them  an 
indorsement  in  full  to  his  or  another's  order  or  he  may  fill 
them  all  up,  making  them  indorsements  to  the  order  of  the 
successive  indorsers  in  blank,  and  thus  show  regular  in- 
dorsements in  full  from  the  payee  to  himself.  Where  he 
makes  one  of  the  blank  indorsements  payable  to  his  order, 
the  other  indorsers  in  blank  are  not  thereby  released  from 
liability  unless  he  cancels  their  indorsements.^ 

Indorsements  in  full,  on  the  othor  hand,  cannot  be  made 
indorsements  in  blank,  by  striking  out  the  superscription 
of  the  indorsement.^ 

§  90.  Absolute,  conditional  and  restrictive  indorse- 
ments.—  Most  indorsements  are  geiierully  what  is  called 
absolute;  and  the  liability  of  the  indorser  is  subject  to  the 
single  condition  that  there  must  be  a  presentment  for  pay- 
ment and  notice  of  non-payment  to  the  indorser;  and, 
whenever  protest  is  required,  that  the  bill  or  note  so  in- 
dorsed shall  be  duly  protested  for  non-payment.  But 
while  it  is  very  uncommon,  other  conditions  m  ly  be  at- 
tached to  the  indorsement,  without  destroying  the  negotia- 
bility of  the  p.iper.  Until  the  stipulated  condition  is 
performed,  the  indorsee  cannot  demand  payment,  and 
payment  to  him  before  performance  of  the  condition  will 
discharge  the  obligation  to  the  indorser  of  the  maker  of 
the  note,  or  acceptor  of  the  bill,  which  has  been  indorsed 
conditionally.-^ 

The    more    common    kind   of  qualified    indorsements    is 

Skinner  v.  Church,  36  Iowa,  91;  Custis  v.  Sprague,  51  Cal.  239;  Jones  v. 
Shapera,  57Fed.457;  6  C.  C.  A.  423;  McAuliffe  v. Renter,  63111.  App.  255. 

1  Craig  V.  Brown,  Pet.  C.  C.  171;  Bank  v.  Ellis,  9  Fed.  46;  Cole  v. 
Cushing,  8  Pick.  48;  Ritchie  v.  Moore,  5  Munf.  388  (7  Am.  Dec.  688); 
Chautauqua  Co.  Bk.  v.  Davis,  21  Wend.  584;  Bank  of  America  v.  Senior, 
11  R.  I.  376.  But  if  he  cancels  an  indorsement  in  blank,  he  will  thereby 
release  the  subsequent  indorsers,  unless  it  is  done  with  their  consent. 
Curry  v.  Bank  cf  Mobile,  8  Port.  360;  Union  Nat.  Bank  v.  Grant,  48  La. 
Ann.  18  (18  So.  705). 

2  Porter  V.  Cushman,  19  111.  572;  Morris  v.  Poillon,  50  Ala.  403. 

3  Robertson  v.  Kensington,  4  Taunt.  30;  Soares  v.  Glyn,  14  L.  J.  Q. 
B.  313;  Tappam  v.  Ely,  15  Wend.  362. 

220 


CH.  VIII. J  TRANSFER    BY    INDORSEMENT.  §   90 

what  are  known  as  restrictive  indorsements,  indorsements 
which  are  made  with  restrictions  as  to  the  purpose  of 
the  indorsement.  Restrictive  indorsements  destroy  the 
negotiability  of  tlie  lull  or  note,  as  long  as  they  are  not 
canceled,  or  the  restrictions  not  removed.  An  indorse- 
ment to  "A  only"  or  to  the  wse,  or  for  the  credit  or 
account^  of  the  indorser  or  of  some  othei-  person,  is 
a  restrictive  indorsement.^  Another  very  common  kind 
of  restrictive  indorsement  is  the  indorsement  "  for  col- 
lection." 2 

The  power  of  further  transfer  is  taken  away  altogether 
by  a  restrictive  intiorsement,  and  the  restrictive  indorsee  is 
only  empowered  to  hold  or  collect  the  money  due  on  such 
bill  or  note,  and  apply  it  to  the  use  or  benefit  of  the  per- 
son for  whom  the  indorsement  has  been  made.  Inasmuch 
as  the  restriction  is  written  on  the  back  of  the  paper,  a 
subsequent  purchaser  is  charged  with  notice  of  the  limited 
title  of  the  indorsee.^  Such  an  indorsee  cannot  even  bring 
suit  on  the  bill  or  note,  if  it  has  been  dishonored.  The  suit 
mnst  be  brought  by  the  person  for  whose  benefit  the  in- 
dorsement was  made.  This  is  undoubtedly  the  case  where 
the  indorsement  is  "  for  collection."  ^     The  restrictive  in- 

1  White  V.  Miners'  National  Bank,  102  U.  S.  658;  Wilson  v.  Holmes, 
5  Mass.  543  (4  Ana.  Dec.  75);  Hook  v.  Pratt,  78  N.  Y.  371  (34  Am.  Rep. 
539);  Lawrence  v.  Fussell,  77  Pa.  St.  460;  Williams  u.  Potter,  72  Ind. 
354;  Johnson  v.  Mitchell,  50  Tex.  212  (32  Am.  Rep.  602);  Carrillo  v. 
McPhillips,  55  Cal.  1.30. 

2  Goetz  V.  Bank  of  Kansas  City,  119  U.  S.  551;  Sweeney  v.  Easter,  1 
Wall.  166;  Fawsett  v.  Nat.  Life  Ins.  Co.,  97  111.  11  (37  Am.  Rep.  95); 
Freeman's  Nat.  Bank  v.  Nat.  Tube  Works  Co.,  151  Mass.  413  (24  N.  E. 
779);  Flanagan  v  Brown,  70  Cal.  254  (11  P.  706);  Mechanics'  Bank  v. 
Valley  Packing  Co  ,  70  Mo.  643;  First  Nat.  Bank  v.  Gregg,  79  Pa.  St. 
384;  Rock  Co.  Nat.  Bank  v.  Ilollister,  21  Minn.  385. 

3  First  Nat.  Bank  v.  Reno  Co.  Bank,  3  Fed.  257;  Hook  v.  Pratt,  78  N.  Y. 
371  (34  Am.  Rep.  539);  Bank  of  Carke  Co.  v.  Oilman,  81  Hun,  486;  Clanin 
V.  VfW^o-a,  51  Iowa,  15  (50  N.  W,  678);  People's  Bank  v.  Jefferson  Co. 
Sav.  Bank,  106  Ala.  524  (17  So.  728);  Boyer  v.  Richardson  (Neb.  '97),  71 
N.  W.  981 ;  and  cases  cited  in  preceding  note. 

■•  White  V.  National  Bank,  102  U.  S.  658;  Third  Nat.  Bank  v.  Nat.  Bank, 
102  U.  S.  663;  Rock  County  Bank  r.  Ilollister,  21  Minn.  385;  U.  S.  Nat. 
Bank  v.  Crosley,  86  Iowa,  633  (.->3  N.  W.  3.")2). 

221 


§   91  TRANSFER    BY    INDORSEMENT.  [CH.  VIII. 

clorseraent  "for  collection"  or  for  the  use  or  benefit  of 
the  indorser,  may  be  recalled  at  any  time  as  long  as  it  has 
not  been  paid  ;  and  an  absolute  indorsement,  or  presumably 
an  assignment,  to  another  would  work  an  implied  revocation 
of  the  restrictive  indorsement.^  And  where  the  indorser 
cannot  recall  the  restrictive  indorsement,  as  where  it  is  to 
"A.  only,"  a  reindorsement  to  the  indorser,  or  a  second 
absolute  indorsement  by  him  to  the  restrictive  indorsee, 
would  restore  the  negotiability  of  the  paper. ^ 

An  agreement,  attached  to  the  indorsement,  that  the  in- 
dorser shall  not  sell  the  bill  or  note  so  indorsed,  docs  not 
make  it  a  restrictive  indorsement.  It  is  only  a  collateral 
agreement,  the  breach  of  which  would  only  give  rise  to  an 
action  for  damages.^ 

§  91.  Time  and  place  of  indorsement. —  Although 
the  time  of  indorsement  is  of  importance,  in  determining 
whether  the  indorsee  is  entitled  to  the  protection  of  a  bona 
fide  holder,*  the  bill  or  note  may  be  transferred  by  indorse- 
ment, and  the  indorser  is  bound  by  his  guaranty  of  the 
honor  of  the  paper,  whether  the  indorsement  is  made  before 
or  after  maturity.^ 

If  the  indorsement  is  not  dated  —  and  it  is  not  custom- 
ary to  date  the  indorsement —  it  is  presumed,  in  the 
absence  of  evidence  to  the  contrary,  that  it  was  made  be- 
fore maturity,  and  that,  therefore,  the  indorsee  took  the 

1  Atkins  V.  Cobb,  51  Ga.  86;  Brook  v.  Van  Nest,  58  N.  J.  L.  162  (33  A. 
382) ;  Branch  v.  U.  S.  Nat.  Bank  (Neb.  '97),  70  N.  W.  34. 

2  Fawsett  v.  Nat.  Life  Ins.  Co.,  97  111.  11  (37  Am.  Rep.  95)  ;  Holmes 
V.  Hooper,  1  Bay,  160;  Marskey  v.  Turner,  81  Mich.  62  (45  N.  W.  644) 
(oral  agreement  to  transfer  absolute  title  sufficient). 

3  Leland  u.  Parriott,  35  Iowa,  454.  See  Equitable  Ins.  Co.  v.  Harvey 
(Tenn.  '97),  40  S.  W.  1092. 

4  As  to  which,  see  post,  §  107. 

5  National  Bank  of  Washington  v.  Texas,  20  Wall.  72;  Baxter  v. 
Little,  6  Met.  71  (39  Am.  Dec.  707);  French  u.  Jarvis,  29  Conn.  387; 
James  v.  Chalmers,  6  N.  Y.  209;  Leavitt  v.  Putnam,  3  N.  Y.  494  (53  Am. 
Dec.  322);  Brown  u.  Hull,  33  Gratt.  287;  McSherry  u.  Brooks,  46  Md. 
103;  Powers  v.  Nelson,  19  Mo.  190;  First  Nat.  Bank  of  Salem  v.  Grant, 
71  Me.  374. 

222 


CH.   VIII.]  TRANSFER    BY    INDORSEMENT.  §   02 

paper  free    from    any   defect  of   title    or    other    equitable 
defense. 1 

The  indorsement  is  also  presumed  to  have  been  made  at 
the  place  where  the  instrument  was  dated. ^ 

§  92.  Irregular  indorsements  —  Joint  makers,  guar- 
antors, indorsers. —  It  is  a  very  common  practice,  in  this 
country  at  least,  for  one  to  guarantee  the  payment  of  a  bill 
or  note,  merely  by  writing  his  name  on  the  back  of  the 
paper.  Since  he  had  not  been  payee  or  indorsee  of  the 
bill  or  note,  he  is  not  really  an  indorser;  for  an  indorser  is 
strictly  one  who  transfers  an  instrument  which  is  payable 
to  his  order  by  writing  his  name  on  the  back  of  the  instru- 
ment, and  incidentally  guarantees  its  payment.  In  the 
case  under  inquiry,  he  does  not  intend,  nor  in  fact  does  he 
do  more  than,  to  guarantee  the  payment  of  the  bill  or  note. 
Two  difficulties  are  experienced  in  determining  the  char- 
acter in  which  he  becomes  liable.  Firsts  the  statute  of 
frauds  requires  all  guaranties  to  be  in  writing  ;  and  merely 
signing  his  name  on  the  back  r)f  the  paper,  without  stating 
for  what  purpose  he  has  so  signed,  is  not  a  compliance  with 
the  requirements  of  the  Statute  of  Frauds.  This  objection 
could  be  avoided,  if  the  facts  warranted  the  construction 
that  the  party  so  signing  became  a  joint  maker  of  a  note, 
or  joint  drawer  of  a  bill.  But  in  the  case  of  notes  so  in- 
dorsed, the  second  difficulty  will  not  have  been  overcome, 
viz. :  that  a  party,  so  guaranteeing  the  payment  of  a  note, 
expects  to  l)e  notified  of  the  dishonor  of  the  paper,  as  a 
condition  precedent  to  his  liability  on  such  indorsement. 
Joint  makers  of  notes  are  not  entitled  to  notice. 

In  their  attempts  to  avoid  these  dilemmas,  the  courts 
have  reached  contradictory  conclusions  as  to  the  character 

1  New  OrleaLS  Canal  &c.  Co.  v.  Moutgomer}-,  95  U.  S.  IG;  Good  v. 
Martin,  95  U.  S.  90;  Noxon  v.  DeWolf,  10  Gray,  343;  Balch  v.  Onion,  4 
Cush.  559;  Pinkerton  v.  Bailey,  8  Wend.  600;  Smith  u.  Nevlin,  89  111. 
193;  Dodd  v.  Doty,  98  111.  393;  Mason  v.  Noonan,  7  Wi.s.  (;09 ;  Patterson 
V.  Carrell,  GO  Ind.  128;  Gage  v.  Averill,  57  Mo.  App.  Ill ;  Smith  v.  Ferry, 
09  Mo.  142;  Rahm  v.  King-Bridge  Mfg.  Co.,  16  Kan.  530. 

2  Maxwell  v.  Vansant,  46  111.  58. 

223 


§   92  TRANSFER    BY    INDORSEMENT.  [OH.   VIII. 

in  which  such  an  indorseris  to  be  held  liable.  There  seems 
to  he  an  unanimity  of  opinion,  that  where  the  paper  is  payr 
able  to  bearer,  originally  or  made  so  subsequently  by  an 
indorsement  in  blank,  a  subsequent  indorsement  in  blank  is 
presumed  to  be  a  regular  indorsement,  and,  at  least  a  sub- 
sequent indorser,  as  against  the  payee  named  in  the  paper, 
and  other  indorsers,  who  have  transferred  the  paper  by 
indorsement.^  But  when  the  signature  of  this  irregular 
indorser  precedes  in  point  of  place  the  indorsement  of  the 
payee,  or  when  there  is  an  unbroken  line  of  indorsements 
in  full  from  the  payee  to  the  present  holder,  in  none  of 
which  does  this  irregular  indorser  appeur  as  an  indorsee, 
it  is  plain  that  he  has  not  become  an  indorser,  by  virtue  of 
his  prior  character  as  payee  or  indorsee*.  In  the  absence  of 
parol  evidence,  showing  his  real  character,  it  is  left  to  judi- 
cial presumption  to  determine  in  what  character  he  has 
bound  himself  by  such  an  indorsement. 

Where  his  indorsement  appears  before  the  indorsement 
of  the  payee,  it  is  not  irrational  to  presume  that  it  was  put 
there  before  the  negotiation  of  the  instrument,  that  he 
signed  as  joint  maker,  and  that  the  same  consideration  sup- 
ports his  liability  as  well  as  that  of  the  real  maker. ^  And 
perhaps  a  plurality  of  the  cases  maintain,  in  contradiction 
of  the  real  facts  of  most  cases,  that  an  irregular  indorser 
\&  prima  facie  liable  as  a  joint  maker. ^ 

*  Dubois  V.  Mason,  127  Mass.  37  (34  Am.  Rep.  335);  Lank  v.  Morri- 
son, 44  Kan.  594  (24  P.  1106);  Thaclier  v.  Stevens,  48  Conn.  5G1  (33 
Am.  Rep.  39);  Armstrong  v.  Harshman,  61  Ind.  52  (28  Am.  Rep.  665); 
Montgomery  v.  Crossthwalte,  90  Ala.  653  (8  So.  498) ;  Frank  v.  Lilien- 
feld,  33  Gratt.  393;  Hately  v.  Pike,  162  111.  241  (44  N.  E.  461)  ;  Chicago 
T.  &  Sav.  Bank  v.  Nordgren,  157  111.  663  (42  N.  E.  148). 

2  Good  V.  Martin,  95  U.  S.  90;  Hagar  v.  Whitmore,  82  Me.  248  (19  A. 
444);  Way  v.  Butterworlh,  108  Mass.  509;  Spencer  v.  Allerton,  60  Conn. 
410  (22  A.  778);  Hayden  v.  Weldon,  42  N.  J.  L.  128  (39  Am.  Rep.  551); 
Morrison  Lumber  Co.  v.  Lookout  Mt.  Hotel  Co.,  92  Tenn.  6  (20  S.  W. 
292);  Stein  v.  Passmore,  25  Minn.  256;  Blakeslee  v.  Hewett,  76  Wis. 
341  (44  N.  W.  1105) ;  Miller  v.  Clendennin,  42  W.  Va.  416  (26  S.  E.  512). 

3  Good  V.  Martin,  95  U.  S.  90;  Brooks  v.  Stackpole  (Mass.  '97),  47  N. 
E.  419;  Peninsular  Sav.  Bank  v.  Hosie  (Mich.  '97),  70  N.  W.  890;  Rossi 
V.  Schawacker,  66  Mo.  App.  67;  Woods  u.  Woods,  127  Mass.  141;  Spauld- 
ing  V,  Putnam,  128  Mass.  363;  Com.  v.  Powell,  II  Gratt.  828;  Davidson 

224 


CH.  VIII.]  TKANSFEK    BY    INDORSEMENT.  §   92 

A  great  many  cases,  on  the  other  hand,  hold  this  irregu- 
lar indorser  to  be  liable  as  a  guarantor,  and  either  hold 
that  the  Statute  of  Frauds  does  not  apply  to  such  cases,  so 
as  to  require  a  writing  of  the  terms  of  the  guaranty  above 
the  guaranty,  or  concede  to  the  holder  the  implied  power 
to  write  out  the  guaranty  above  such  an  indorsement.^ 

Again,  other  cases  hold  him  to  be  a  joint-maker,  with 
the  liability  of  a  guarantor.^ 

Finally,  in  other  States,  this  irregular  indorser  is  held 
to  have  the  same  liability  and  the  same  right  of  notice,  as  a 
regular  indorser;  in  most  cases,  being  treated  as  the  second 
indorser  in  the  absence  of  parol  evidence  to  the  contrary,^ 
although,  at  least  in  New  York,  where  the  indorsement  of 
a  stranger  precedes  that  of  the  payee,  the  irregular  in- 
dorser is  presumed  to  be  a  Hrst  indorser.^ 

V.  Powell,  114  N.  C.  575  (19  S.  E.  GOl)  ;  McCallum  v.  Driggs  (17  Ro. 
407);  35  Fla.  277;  Owings  v.  Baker,  54  Md.  82  (39  Am.  Rep.  353);  Moy- 
nahan  v.  Hanford,  42  Mich.  329;  Allison  v.  Kinne,  104  Mich.  141  (02  N. 
W.  152);  Semple  v.  Turner,  65  Mo.  696;  First  Nat.  Bank  v.  Payne,  111 
Mo.  291;  208  W.  41  (peculiar  case);  Best u.  Hoppie,  3  Colo.  139;  Schullz 
V.  Howard,  63  Minn.  198  (65  N.  W.  .363);  Robinson  v.  Bartlctt,  11  Minn. 
410;  Salisbury  v.  First  Nat.  Bank,  37  Neb.  872  (56  N.  W.  727)  ;  Houghton 
V.  Ely,  2G  Wis.  181  (7  Am.  Rep.  52);  Donohue-Kelly  Banking  Co.  v. 
Puget  Sound  Sav.  Bk.,  13  Wash.  407,  411  (43  P.  359,  942) ;  Provident  Sav. 
L.  Ass.  Co.  V.  Edmonds,  95  Tenn.  53  (31  S.  W.  168). 

1  Parkhurst  v.  Vail,  73  111.  343;  Boynton  v.  Pierce,  79  111.  145;  Hol- 
brook  V.  Camp,  38  Conn.  23;  Chaddock  v.  Vanness,  35  N.  J.  L.  517; 
Rivers  v.  Thomas,  1  Lea,  649  (27  Am.  Rep.  784) ;  Welsh  v.  Ebersole,  75 
Va.  651;  Robinson  v.  Abell,  17  Ohio  St.  36;  Crooks  v.  TuUy,  50  Cal.  254; 
Fuller  V.  Scott,  8  Kan.  254;  Gumz  v.  Giegling  (.Mich.),  66  N.  W.  48; 
Varley  v.  Title  Guarantee  &  T.  Co.,  60  111.  App.  665.  But  see,  as  to  what 
will  support  this  presumption,  Cozzens  v.  Chicago  Hydraulic  Press,  etc., 
Co.,  166  111.  213  (46  N.  E.  788). 

2  Syme  v.  Brown,  19  La.  Ann.  147;  Chandler  v.  Westfall,  30  Tex.  477; 
Killian  v.  Ashley,  24  Ark.  511  (91  Am.  Dec.  519). 

3  Phelps  V.  Visher,  50  N.  Y.  69  (10  Am.  Rep.  433);  Ilt-ndrie  v.  Kin- 
near,  84  Hun,  141 ;  Browning  v.  Merritt,  61  Ind.  425;  Newbold  v.  Boraef, 
155  Pa.  St.  227  (26  A.  305)  ;  Johnston  v.  McDonald,  41  S.  C.  81  (19  S.  E. 
65);  Cady  v.  Shepard,  12  Wis.  713;  Bradford  v.  Prescott,  85  Me.  482 
(27  A.  461) ;  Needhams  v.  Page,  3  B.  Mon.  465;  Perry  v.  Friend,  57  Ark. 
437  (27  S.  W.  1065)  ;  Buscher  v.  Murray,  21  D.  C.  612;  State  Trust  Co. 
V.  Owen  Paper  Co.,  162  Mass.  156  (by  statute) ;  38  N.  E.  438. 

••  Moore  v.  Cross,  19  N.  Y.  227  (75  Am.  Dec.  326);  Jaffray  v.  Brown, 

15  220 


§   92  TRANSFER    BY    INDORSEMRNT.  [CH.   VIII. 

In  very  many  of  the  States,  now,  the  matter  is  regu- 
lated by  statute  ;  in  some,  the  irreguhir  indorser  being 
declared  to  be  a  guarantor,  and  in  others,  an  indorser.^ 

In  the  absence  of  statute,  controlling  the  question,  the 
presumptions,  heretofore  explained  as  prevailing  in  the 
different  States,  are  all  rebuttable  by  parol  evidence  of 
the  actual  intent  with  which  the  irregular  indorsement 
was  made.  Parol  evidence  is  admissible  to  show  that  such 
an  indorser  intended  to  be  bound,  either  as  joint  ranker, 
guarantor,  surety  or  indorser.^ 

But  if  an  indorsement  is  regular,  i.  p.,  it  constitutes  a 
link  in  the  successive  transfer  of  the  bill  or  note  from  the 
piiyee  to  the  last  indorsee,  parol  evidence  is  not  admissible 
to  show  that  an  indorser  did  not  intend  to  be  bound  as 
such,  at  least  as  against  a  bona  fide  holder.^ 

74  N.  Y.  393;    Bank  of  Port  Jervis  r.  Darling,  91  Hun,  236;   Wade  «. 
Creighton,  25  Oreg.  455  (36  P.  289). 

1  For  a  fuller  discussion  of  this  perplexing  question,  see  Tiedeman 
Cora.  Paper,  §§  270,  271. 

2  Good  •;;.  Martin,  95  U.  S.  90;  Patch  v.  Washburn,  16  Gray,  82;  Brown 
V.  Butler,  99  Mass.  179;  Eilbert  v.  Finkbeiuer,  68  Pa.  St.  243  (8  Am.  Rep 
176)  ;  Owings  v.  Baker,  54  Md.  82  (39  Am.  Rep.  353);  Cahn  v.  Duaton, 
60  Mo.  297;  Baker  v.  Robinson,  63  N.  C.  191;  Browning  v.  Merritt,  61 
Ind.  425;  Eberhart  v.  Page,  89  111.  550;  Worden  v.  Salter,  90  111.  160; 
Seymour  v.  Mickey,  15  Ohio  St.  515;  Holmes  v.  Preston,  70  Miss.  152 
(12  So.  202). 

8  Latham  v.  Houston  Flour  Mills,  68  Tex.  127  (3  S.  W.  462) ;  Howe 
V.  Merrill^  5  Gush.  80;  Hauer  v.  Patterson,  84  Pa.  St.  274;  Long  «. 
Campbell,  37  W.  Va.  665  (17  S.  E.  197);  Finley  v.  Green,  85  111.  535; 
Doom  V.  Sherwin,  20  Colo.  234  (38  P.  56) ;  Barnard  v.  Goslin,  23  Minn. 
192;  Simmons  v.  Camp,  64  Ga.  726. 

226 


CH.  VIII.]  TRANSFER   BY    IXDOKSEMENT.  ILL.  CAS. 


ILLUSTRATIVE  CASES. 

Allin  V.  Williams,  97  Cal.  4C3  (32  P.  441). 

Watsou  V.  ChL'Sire,  18  Iowa,  202  (87  Am.  Dtc.  382). 

Farr  v.  Ricker,  4G  Oiiio  St.  205  (21  N.  E.  3.54). 

People's  Bank  v.  Jefferson  Co.  Sav.  Bank,  lOG  Ala.  524  (17  So.  728). 

Blakeslee  v.  Hewitt,  76  Wis.  341  (44  N.  W.  1105). 

Authority  of  Agent  to  Indor.se  for  Principal  —  Ratifica- 
tion —  Double  Effect  and  Purpose  of  Indorsement. 

Allinw.  Williams,  97  Cal.  403  (32  P.  441). 

Department  1.  Appeal  from  superior  court,  Los  Angeles  county ; 
W.  J.  Clark,  Judge. 

Action  by  Jolin  Allin,  trustee,  against  R.  NYilliams,  to  recover 
a  buhince  due  on  a  note  indorsed  by  defendant.  From  a  judg- 
ment for  plaintiff,  and  an  order  denying  a  nevv  trial,  defendant 
appeals.     Affirmid. 

IIauuison,  J.  In  February,  1888,  10  individuals,  including 
the  |)laiiitiff  and  tlie  defendant  herein,  borrowed  upon  their  indi- 
vidual credit  the  sum  of  $10,000,  for  the  use  and  benefit  of  the 
Pasadena  Lake  Vineyard,  Land&  Water  Corapanj^  a  corporation 
in  which  they  were  interested  ($5,000  thereof  from  the  San 
Gabriel  Valley  Bank,  and  $5,000  from  a  Mrs.  Banta),  for  which 
they  gave  their  joint  and  several  notes.  About  a  month  after- 
wards the  corporation  paid  to  the  defendant  i\  sufficient  sum  of 
money  therefor,  for  the  purpose  of  taking  up  the  notes  and  repay- 
ing the  suras  thus  advanced,  and  (he  defendant  deposited  the 
same  with  tlie  San  Gabriel  Valley  Bank,  to  the  credit  of  "  R. 
Williams  et  al."  He  immediately  paid  the  loan  that  had  been 
made  by  the  bank,  but  Mrs.  Banta  refused  to  accept  the  money 
on  her  note,  for  the  reason  that  it  would  not  mature  for  nearly  a 
year,  and  tliereujjon  the  money  for  its  payment,  viz.,  $5,221.98, 
was  left  in  the  bank  to  the  aforesaid  credit.  Prior  to  this  time 
the  defendant  had  contracted  to  sell  to  one  Webster  certain  real 
property  in  Pasndena,  and  Webster  had  contracted  to  sell  a  i)or- 
tion  of  the  same  property  to  one  Wilson.  Wei)StL'r  was  owing 
defendant  $5,000  on  his  contract  of  purchase,  and  Wilson  was 
owing  to  Webster  a  little  more  than  this  amount  on  his  contract 
with  him  ;  and  on  Apiil  18,  1888,  in  pursuance  of  an  arrangement 
l)etween  them  for  the  i)nrpose  of  1  quidaling  these  several  obliga- 
tions, the  defendant  made  a  conveyance  of  the  land  to  Wilson, 
Webster  uniting  therein.  Wilson  executed  to  the  defendant  his 
note  for  $5,000,  payable  February  10,  1889,  and  secured 
the  same  by  a  mortgage  ui)on  the  land,  made  to  the  defenda  it, 
as  trustee  for  the  10  individuals  who  h;id  signed  the  Banta 
not";  and  on  April  2Ist  the  defendant  transferred  the  aforesaiil 
sum  of  $5,221.98  from  the  account  of  "  R.  Williams  et  al.,"  to  his 
own  personal  account  in  the  same  bank.  In  September  of  that 
year  several  of  these  individuals  exp  essed  a  dissatisfaction  with 

227 


ILL.  CAS.  TRANSFER    BY    INDORSEMENT.  [CH.  VIIl. 

his  acts  relating  to  the  money,  and  thereupon  the  defendant,  act- 
ing through  his  attorney,  Wright,  who  was  one  of  the  10,  surren- 
dered to  Wilson  the  aforesaid  note  and  mortgage,  and  took  from 
him  a  new  note  for  $5,000,  maturing  February  10,  1889,  payable 
to  "  R.  Williams  or  order,"  together  with  a  mortgage  on  the  same 
property,  securing  its  payment,  and  on  the  same  day  indorsed  the 
note  to  the  order  of  "  John  Allin,  as  trustee,"  the  plaintiff 
herein,  and  assigned  the  mortgage  to  him  "in  trust  for  the 
benefit  "  of  the  10  contributors,  naming  them.  After  the  Wilson 
note  had  matured,  the  plaintiff  brought  an  action  thereon,  making 
Wilson  and  the  defendant  herein  defendants  in  the  action.  Wil- 
son suffered  default,  and  the  plaintiff,  having  dismissed  the  de- 
fendant herein  from  the  action,  took  judgment  against  Wilson  for 
the  amount  of  the  note,  and  for  a  sale  of  the  mortgaged  property. 
Upon  the  sale  under  that  judgment  tlie  property  was  bid  in  by  the 
plaintiff  for  the  sum  of  $2,400,  and  the  sheriff  returned  a  defi- 
ciency judgment  of  $3,737.  Thereupon  the  plaintiff,  as  trustee 
for  the  benefit  of  the  10  contributors,  brought  this  action  to  re- 
cover from  the  defendant  the  amount  of  this  deficiency. 

1.  The  action  against  the  defendant  is  for  the  purpose  of  en- 
forcing his  liability  as  an  indorser  upon  the  Wilson  note.  The 
averments  of  a  recovery  of  judgment  in  the  action  against  Wilson, 
and  of  the  proceedings  thereunder,  are  for  the  purpose  of  show- 
ing that  a  portion  of  the  note  has  been  paid  by  subjecting  the 
security  given  therefor  to  a  sale,  and  thus  determining  the  amount 
to  be  recovered  from  the  defendant.  The  right  to  maintain  an 
action  against  the  indorser  of  a  note  whose  payment  has  been 
secured  by  a  mortgage  given  by  the  maker,  after  judgment  has 
been  recovered  against  themaker  in  asuit  to  foreclose,  was  estab- 
lished in  Vandewater  v.  McRae,  27  Cal.  596. 

2.  The  court  finds  that  Wright,  who  was  the  defendant's  at- 
torney, by  whom  the  indorsement  was  made,  was  fully  authorized 
to  indorse  the  note,  and  there  was  sufficient  evidence  before  it  to 
authorize  this  finding.  Aside  from  the  general  power  of  attorney 
which  he  had  given  him,  the  defendant  directed  Wright,  at  the 
time  he  was  leaving  the  State,  in  September,  just  after  objection 
had  been  made  by  the  contributors  to  his  disposition  of  the  money, 
to  fix  the  matter  up  to  suit  those  who  were  making  those  objec- 
tions, and  while  he  was  absent  from  the  State  he  sent  a  telegram 
to  Wright  to  exercise  his  best  judgment  in  arranging  the  matter. 
In  addition  to  this,  the  defendant  himself,  after  his  return  to 
Pasadena,  indorsed  upon  the  note  a  waiver  of  payment,  present- 
ment for  payment,  protest  and  notice  of  protest,  and  the  court 
was  authorizeU  to  treat  this  act  as  an  aflBrmance  and  ratification 
of  the  prior  indorsement  by  his  attorney. 

3.  The  appellant  contends  that  his  indorsement  of  the  note  to 
the  plaintiff  was  without  consideration,  and  merely  for  the  pur- 
pose of  transferring  the  title  thereto,  and  that  he  did  not  incur 
the  liability  of  an  indorser.  An  indorser  may  show,  as  between 
himself  and  his  immediate  indorsee,  that  the  indorsement  was 

228 


CH.  Vni.]  TRANSFEK    BY    INDORSEMENT.  ILL.   CAS. 

made  merely  for  the  purpose  of  transferring  the  note  from  a 
nominal  bolder  to  the  true  owner,  as  from  an  agent  to  his  i)rin- 
cipal ;  or  that  the  circumstances  umler  whicli  the  indorsement 
was  made  were  such  as  would  rend*  r  it  inecjuitable  to  enforce  an 
indorser's  liability  against  him  (McPlieison  v.  Weston,  85  Cal. 
90  ;  24  Pac.  Kop.  733)  ;  but  in  any  such  case  the  burden  of  estab- 
lishing such  a  defense  to  the  apparent  liabibty  attendant  upon  his 
indorsement  rests  upon  the  indorser.  The  court  below  found 
upon  evidence  (which  we  thiidc  ampl}'  sustains  its  fuiding),  that 
the  "  indorsement  on  the  suid  note  was  made  for  the  purpose  of. 
making  tlie  said  defendant  lial)le  as  an  indorser  of  said  note,  and 
giving  to  the  persons  for  whose  benefit  the  plaintiff  prosecutes 
this  action  the  additional  security  of  such  indorsement  and  was 
made  and  received  in  settlement  of  the  differences  which  ex- 
isted between  the  defendant  and  the  said  persons  and  that 
it  is  untrue  that  said  indorsement  was  without  considera- 
tion." When  the  money  was  placed  in  the  hands  of  the 
defendant,  he  w^as  but  a  mere  depositary  thereof  for  the 
purpose  of  pacing  the  Banta  note,  and  after  Mrs.  Banta  had 
refused  to  accept  it  until  the  note  should  mature,  he  still  held  it 
in  trust  for  the  10  contributors,  without  any  authority  to  make 
any  other  disposition  of  it.  Although  some  of  these  contributors 
expressed  an  opinion  that  the  money  ought  not  to  lie  idle,  but 
should  earn  as  much  interest  as  they  were  paying  to  Mrs.  Banta, 
still  the  defendant  does  not  claim  to  have  had  any  express  author- 
ity to  make  a  loan  of  it,  but  seeks  to  uphold  bis  action  by 
showing  that  there  was  a  general  desire  that  it  should  be  loaned. 
He  does  not  claim  to  have  spoken  specifically  to  more  than 
three  or  four  of  the  contributors,  and  they  contardicted 
his  statement,  and,  as  well  as  the  others,  testified  that 
the  loan  to  Wilson  was  made  without  their  knowledge. 
Under  this  evidence  the  court  was  authorized  to  find  that  the 
making  of  the  loan  to  Wilson  was  his  own  act,  and  those  for 
whom  he  held  the  money  had  the  right  to  hold  hiin  responsible 
for  any  loss.  They  had  tlie  right  to  demand  of  him  a  transfer  to 
another  trustee  of  all  of  the  money  wliich  had  originally  been 
placed  in  his  hands  for  the  purpose  of  paying  tlie  Banta  note, 
irrespective  of  the  use  which  he  had  made  of  it ;  but,  instead 
thereof,  they  agreed  to  accept  a  transfer  of  the  Wilson  note  and 
mortgage,  with  the  additional  security  of  the  defendant's  indorse- 
ment. This  was  a  direct  advantage  to  the  defendant,  as  it  relieved 
him  from  the  obligation  to  make  immediate  jjaymentof  the  trust 
money,  and  gave  him  the  contingent  advantage  of  having  histtbli- 
gation  entirely  satisfied  out  of  the  mortgage  security  given  by 
Wilson.  The  defendant  docs  not  contend  that  there  was  any 
express  agreement  by  which  his  indorsement  of  the  Wilson  note 
was  to  be  taken  in  satisfaction  of  his  liability  for  the  money  left 
with  him  in  trust,  but  insists  that  the  circumstances  under  which 
the  indorsement  was  made  show  that  it  was  so  intended.  Instead, 
however,  of  it  appearing  in  the  evidence  that  it  was  the  intention 

229 


ILL.   CAS.  TRANSFER    BV    INDORSEMENT.  [CH.  VIII. 

of  tie  parties  to  accept  the  Wilson  note  and  mortgage  in  satis- 
faction of  the  obligation  of  the  defendant,  the  circumstances  and 
negotiations  between  tliem  at  tLie  time  of  the  transaction  show 
that  the  parties  were  dealing  at  arm's-length,  and  that  the  con- 
tributors were  demanding  the  indorsement  of  the  defendant  as  an 
additional  security;  and  the  court  was  justified  in  finding  that  it 
was  given  for  that  purpose.  It  is  undoubtedly  true  that  when  a 
trustee  holds  funds  which  it  is  his  duty  to  invest,  and  when  the 
beneficiaries  are  interested  chiefly  in  the  income  resulting  from 
such  investment,  he  will  not  be  held  liable  for  a  depreciation  of 
the  security,  or  even  for  a  loss  in  an  investment  that  was  made 
by  him  in  good  faith,  and  upon  suitable  security  which  was  ample 
at  the  time  of  the  investment.  But  tliis  rule  has  no  application 
to  the  present  case.  The  defendant  was  a  trustee  of  the  moneys 
placed  in  his  hands  for  the  sole  purpose  of  paying  the  Banta 
note,  and  when  tliat  could  not  be  done  his  duty  was  merely  to 
hold  tlie  money  until  those  for  whose  benefit  he  held  it  should 
give  him  definite  directions.  He  was  at  no  time  a  trustee  for  the 
purpose  of  lending,  or  with  power  to  lend,  the  money.  The  court, 
moreover,  finds  that  his  acts  in  making  the  loan  were  not  only  not 
authorized  by  the  contributors,  but  also  that  the  loan  itself  was 
not  made  in  good  faith.  The  land  which  he  took  from  Wilson  as 
security  for  the  note  was  at  the  time  held  by  him  as  security  for 
an  obligation  of  Webster  to  himself,  and  he  was  pressing  Webster 
for  payment.  Although  several  of  the  witnesses  testified  that, 
in  their  opinion,  the  land  was  at  that  time  a  sufficient  security  for 
the  loan,  yet  they  were  unable  to  corroborate  their  opinion  by 
evidence  of  a  sale  of  any  land  in  that  vicinity  at  any  time  between 
the  transaction  with  Wilson  and  the  time  of  the  trial,  and  it 
appeared  that  within  a  little  more  than  a  year  it  sold  for  less  tlian 
half  the  amount  of  the  loan.  It  was  also  shown  that  lands  were 
then  declining  in  value,  and  Webster  was  himself  willing  to  deduct 
Si, 200  from  the  amount  due  him  from  Wilson,  in  order  to  effect 
the  arrangement  by  which  Wilson  should  be  substituted  for  him- 
self as  the  debtor  to  the  defendant.  These  facts  authorized  the 
court  to  find  that  the  defendant  dealt  with  the  trust  property  for 
his  own  profit,  in  violation  of  section  2229,  Civil  Code,  and,  con- 
sequently, that  he  did  not  act  in  good  faith  in  making  the  loan. 
Section  2234,  Id. 

4.  The  judgment  in  the  case  of  AUin  v.  Wilson  is  not  set  forth 
in  the  record,  and  we  cannot  say  that  it  is  of  such  a  character  as 
to  constitute  a  bar  to  the  present  action.  The  mere  filing  of  a 
dismissal  with  the  clerk,  or  the  entry  of  an  order  of  dismissal  in 
ihe  minutes  of  the  court,  would  not,  of  itself,  constitute  such  a 
hSiV.  The  facts  shown  in  reference  to  the  dismissal  justify  the 
conclusion  that  it  was  filed  before  the  hearing  of  the  matter  upon 
the  default  of  Wilson. 

5.  It  was  not  necessary  that  the  plaintiff  should  have  alleged 
in  his  complaint  or  shown  an  offer  to  assign  to  the  defendant  the 
deficiency  judgment  against  Wilson,  or  that  the  judgment  herein 

230 


CII.  VllI.J  TUANSFER    BV    IN'DOllSKMKNT.  ILL.   CAS. 

should  direct  that  such  assignment  be  made.  Although  anindor- 
ser  is  entitled,  upon  payment  of  a  note  which  he  has  indorsed,  or 
of  a  judgment  against  the  maker  rendered  ttiereon,  to  an  assign- 
ment thereof,  yet  such  assignment  is  not  a  condition  of  the  plain- 
tiff's right  of  recovery,  but  is  a  right  accruing  to  the  defendant 
by  reasnn  of  his  payment. 

6.  A  coiisidt'ral)le  portion  of  the  brief  on  behalf  of  tlie  appel- 
lant has  been  devoted  to  a  discussion  of  the  relative  rights  of  llie 
plaintiff  and  the  defendant  in  the  property  bought  under  the  Wil- 
son judgment,  as  well  as  in  the  deficiency  judgment,  in  case  he 
shall  satisfy  tiie  present  judgment;  and  he  argues  tlierefrom  that, 
as  he  is  liable  for  only  his  sliare  of  the  Baiila  not%  there  can  be 
no  right  of  acliou  against  him  until  that  share  sliuU  have  been 
ascertained  by  a  sale  of  the  property  bouiiht  in  under  the  Wilson 
judgment,  and  tlie  means  of  collecting  the  deficiency  judgment 
against  Wilson  sball  have  been  exhausted.  It  is  unnecessary  for 
us,  however,  to  pass  upon  tliese  questions,  as  ttiey  are  not  in- 
volved in  lliis  action.  This  is  an  ac  ion  by  the  plaintiff,  as  trustee 
for  the  10  contributors,  to  recoverfrora  t'le  defendant  the  unpaid 
amount  of  the  note  taken  by  him  fr  )m  Wilson,  and  indorsed  to 
the  plaintiff.  The  relative  rights  and  obligations  of  the  defend- 
ant towards  the  several  contributors  can  be  presented  in  an  action 
for  their  adjustment  at  the  settlement  of  the  trust,  after  the  Banta 
note  shall  have  been  paid.  The  judgment  and  order  denying  a 
new  trial  are  aflfirmed. 

We  concur:  Garoulte,  J.  ;  Paterson,  J. 


Indorsement  without  Kecoiirse  —  Liability  of   Indorser. 

Watson  V.  Chesire,  18  luwa,  202  (87  Am.  Dec.  382). 

This  is  a  joint  action,  against  John  and  Wesley  Chesire  and 
John  M.  Grifliih.  Tlie  facts,  necessary  to  an  understanding  of 
the  case,  are  as  follows:  Jolin  and  Wesley  Chesire  sold,  May  15, 
1858,  Certain  land  in  Mills  County  to  one  Moore,  receiving,  for 
I)art  of  the  purchase-money,  his  note,  secured  by  a  mortgage  on 
a  portion  of  the  land  sold. 

Afterward,  January  20,  18G0,  the  Chesires  traded  or  sold  the 
note  and  mortgage  of  Mooie  (which  note  was  dated  May  15, 
1858,  was  for  tlie  sum  of  $743,  i)ayable  one  year  after  date,  with 
ten  per  cent  interest)  to  the  defendant  Griffith,  receiving  in  pay- 
ment or  exchange  ninety  acres  of  land,  a  mare  and  a  heifer,  vari- 
ously estimated  by  tlie  witnesses  as  being  worth  from  S250  to 
S400,  and  upwards.  TJie  Chesires  indorsed  to  Gritfith  the  note 
and  mortgage,  without  recourse  to  them. 

Afterward,  about  A[)ril,  18G0,  Griffith  traded  or  exchanged  the 
Moore  note  and  mortgage  to  the  plaintiff,  Watson,  for  certain 
land,  aliO  indorsing  the  same,  without  recourse. 

Watson  sues  tLe  Chesires  and  Griffith  on  the  indorsement. 
The  nature  of  the  pleadings  and  questions  raised  will  appear  in 

231 


ILL.  CAS.  TRANSFER    BY    INDORSEMENT.  [CH.   VIII. 

the  opinion.  Verdict  and  judgment  for  the  defendants,  and 
plaintiff  appeals. 

Dillon,  J.  The  first  error  assigned  by  the  plaintiff  is,  that 
"the  court  erred  in  sustaining  the  defendants'  demurrer  to  the 
first  count  of  the  petition."  This  makes  it  essential  to  set  out  the 
substance  of  this  count  with  accuracy. 

It  commences  by  alleging  that  John  and  Wesley  Chesire  held 
and  owned  the  Moore  note  and  mortgage,  describing  them  ;  that 
January  20,  1860,  the  said  Chesires,  for  a  good  and  valuable 
consideration  (^but  not  alleging  tvhat),  sold  and  assigned  said 
note  to  their  co-defendant,  Griffith,  whereby  they  falsely  war- 
ranted the  said  note  to  be  genuine,  unpaid  and  unsatisfied  in  any 
wa}^ ;  that  afterward  GriflHth,  assignee  as  aforesaid,  sold  and 
assigned  said  note  to  the  plaintiff  for  a  good  and  valuable  con- 
sideration, whereby  he,  Griffith,  falsely  warranted,  etc.,  as  above  ; 
that  plaintiff  relied  upon  said  warranties  and  paid  Griffith  for 
said  note ;  that  the  said  note,  at  tlie  time  the  same  was  assigned 
by  Chesires  to  Griffith,  and  by  Giiffith  to  the  plaintiff,  "had 
been  fully  paid,  extinguished,  and  nothing  was  due  thereon  from 
the  said  Moore  to  the  defendants  or  either  of  them  ;  "  whereby 
"  the  defendants  fraudulently  deceived  the  plaintiff,  to  his 
damage"  in  the  amount  of  said  note.  Copies  of  these  assign- 
ments are  set  forth,  showing  that  they  were  made  "■  loithont 
recourse."  The  first  was  an  assignment  in  full  by  J.  and  W. 
Cliesire  to  "John  M.  Griffith  or  order,  without  recourse."  The 
next  was  in  blank,  as  follows:  "Without  recourse.  John  M. 
Griffith." 

To  this  the  court  sustained  a  demurrer,  both  in  behalf  of  the 
Chesires  and  of  Grifflih. 

We  will  consider  the  case,  with  respect  to  the  Chesires,  sep- 
arately and  first. 

Upon  con.sideration,  we  think  the  demurrer  was  righily  sus- 
tained. 

It  is  only  by  treating  this  count  as  founded  upon  the  indorse- 
ment, that  the  plaintiff's  action  against  the  Chesires  has  any  color 
or  plausibility. 

There  is,  except  through  the  indorsement,  no  privity  between 
the  plaintiff  and  the  Chesires.  The  latter  sold  the  note  to 
Griffith,  and  not  to  tlie  plaintiff.  The  plaintiff  purchased  of 
Griffith,  not  of  tlie  Chesires.  No  transact  on  is  alleged  between 
the  plaintiff  and  the  Chesires.  Hence,  the  plaintiff's  right  to  sue 
the  latter,  if  it  exists  at  all,  must  exist  by  virtue  of  the  contract 
of  indorsement. 

Now  if  tills  count  be  treated  as  one  ex  contractu  upon  the  in- 
dorsement, it  U  not  maintainable,  because  the  indorsement,  on 
its  face,  negatives  and  rebuts  any  personal  liability  on  the  part  of 
the  Chesires.  This  is  the  object  and  effect  of  an  indorsement 
"  without  recourse." 

Such  an  indorsement  transfers  title,  hut  stipulates  for  exemp- 
tion from  the  ordinnry  responsibility  of  an  indorser.     It  will  not, 

232 


CH.  VIII.]  TRANSFEK    BY    INDORSEMENT.  ILL.  CAS. 

however,  protect  the  assignor  from  liability  over  from  fraud  and 
misrepresentation  in  the  assignment  of  tlie  note.  In  point,  see 
Welch  V.  Lindo,  7  Crancii,  159;  2  Curtis'  ed.  496;  Epler  v. 
Funk,  8  Pa.  St.  (8  Barr)  4G8,  469;  Prettyman  v.  Short,  5 
Har.  (Del.)  360;  Ricliardsou  v.  Lincoln,  5  Mete.  201;  Rice  y. 
Stearns,  3  Ma^s.  225  ;  Waite  v.  Foster,  33  Maine,  424 ;  Goupy 
V.  Harden,  7  Taunt.  159,  |ier  Dallas,  J.  ;  Cliitty  on  Bills,  218,  225, 
235  ;  Story  on  Notes,  §  146  ;  Lyons  v.  Miller,  6  Grat.  (Va.)  427. 

Suppose  it  to  lie  tiue  that,  in  the  transfer  of  the  Moore  note 
by  Chesires  to  Griffitli,  the  latter  was  deceived  and  defrauded. 
This  would  give  Griffith  his  right  of  action  against  the  former. 
Suppose  it  to  I  e  true,  also,  that  tjje  plaintiff  was  deceived  and 
defrauded  by  Griffitli.  This  would  give  him  a  right  of  action 
against  the  latter.  He  could  not  sue  the  Chesires  for  the  fraud 
they  practiced  upon  Griffith. 

S  )  that  the  reasoning  drives  us  back  to  the  point  at  which  we 
started,  viz.,  the  plaintiff  cannot  sue  Chesires  ex  contractu,  hav- 
ing had  no  transaction  with  them  exceitt  upon  the  indorsement. 
If  the  first  count  is  treated  as  being  founded  upon  that,  it  fails, 
because  the  indorsement  itself  not  only  does  not  create,  but 
expressly  avoids,  a  cause  of  action.  (^Vide  authorities  above 
cited. ) 

The  case  presents  the  question,  What,  in  the  absence  of  special 
contract,  are  the  obligations  of  the  transferrer  of  negotial)le 
paper,  who  indorses  it  without  recourse?  It  seems  to  us  that  the 
obligations  of  a  transferrer  of  such  paper,  by  indorsement  icith- 
out  recourse,  are  substantially  the  same  as  those  of  a  transferrer 
of  such  paper  when  payable  to  beaier  by  delivery  merely. 

It  is  a  clear  and  well-settled  doctrine,  that  such  a  transfer 
does  not  make  the  parly  liable  as  indorser.  When  he  indorses 
paper  without  recourse,  or  transfers  it  (if  payable  to  bearer  or  if 
indorsed  in  blank)  liy  delivering  merely,  without  putting  his 
name  upon  it,  he  ceases  to  be  a  party  to  the  paper.  He  cannot 
be  made  liable  as  a  party  to  or  upon  the  instrument. 

Tiiere  may  be  a  liability  in  such  case.'!,  but  it  arises  upon  the 
transaction,  upon  the  facts  of  the  ca?e,  to  be  asserte(l  in  an 
action  for  the  originai  consideration  or  its  value  or  for  fraud 
practiced,  and  not  upon  the  indorsement  or  upon  the  paper 
transferred.  Speaking  of  the  same  general  subject,  in  the  well- 
known  case  of  Jones  v.  Ryde,  1  Marsh.  157;  5  Taunt.  489, 
Gibbs,  C.  J.,  says:  The  ground  of  resisting  this  claim  is,  that 
it  was  a  negoiial)le  security  without  indorsement;  an<l  that, 
when  the  holder  of  a  negotiable  security  passes  it  away,  witliout 
indorsing  it,  he  means  not  to  be  responsible  up'  n  it.  This 
doctrine  was  fully  discussed  in  the  case  of  Fenn  v.  Harrison,  3 
T.  R.  757;  and  the  proposition  is  true,  but  only  to  a  certain 
extent.  "  If  a  man  pass  an  instrument  of  this  kind  without 
indorsing  it,  he  cannot  he  sued  as  indorser,  but  he  is  not  released 
from  the  re.'-ponsibility  which  he  incurs  by  jiassing  an  instru- 
ment which   appears  to  be  of  greater  value  than  it  really  is." 

233 


ILL.   CAS.  TRANSFER    BY    INDOH8EMKNT.  [CII,  VIII. 

And  this  case  is  recognized  as  authority  in  the  text-books,  and 
in  England  in  subsequent  cnses:  Wilkinson  v.  Johnson,  3  B.  & 
C.  428,  and  in  this  countr}' :  Cabot  Bank  v.  Morton,  4  Gray,  156, 

The  accepted  doctrine  on  this  subject  may  be  thus  stated: 
Where  a  note  is  transferred  without  recourse,  equally  as  when  it 
is  transferred  by  delivery  only,  the  transferrer  is  exempted  from 
all  the  ordinary  responsibilities  which  attach  to  such  a  transfer. 
(See  authorities  first  in  this  opinion  cited.) 

But  he  does  not,  unless  such  is  the  agreement,  undei'standing, 
or  contract  of  the  parties,  stand  free  from  all  obligations.  Thus, 
unless  otherwise  agreed,  he  warrants  that  the  paper  so  trans- 
ferred is  genuine,  and  not  forced  or  fictitious.  Jones  v.  Ryde, 
supra;  Fuller  v.  Smit)',  Ryan^&  Mood.  49;  1  C.  «&  P.  197; 
Chitty  on  Bills,  245;  Story  on  Notes,  §  118;  Aldiich  v. 
Jackson,  1  R.  I.  218  ;  2  Parsons  on  Notes  and  Bills,  ch.  2,  §  2, 
p.  37,  and  authorities;  Lyons  v.  Miller,  6  Gratt.  247;  Morrison 
V.  Currie,  4  Duer,  79  ;  Cabot  Bank  v.  Morion,  supra;  Rieman  v. 
Fisher,  4  Am.  Law  Reg.  433.  He  warrants  by  implication, 
nothing  to  the  contrary  being  shoivn,  that  it  is  of  the  kind  and  de- 
scription that  it  purports  on  its  face  to  be.  Allen  v.  Pegram,  16 
Iowa,  163,  in  relation  to  illegal  bankst-^ck  ;  Gompertz  v.  Bartlett, 
2  Ellis  &  Bl.  849  ;  24  Eng.  L.  &  Eq.  156,  where  the  vendor  of  a 
bill  was  held  lial)le,  tliough  he  did  not  put  his  name  upon  it; 
Young  V.  Cole,  3  Bing.  N.  C.  714,  as  to  liability  of  vendor  on  the 
sale  of  invalid  Guatemala  bonds  ;  and  see,  further,  the  authorities 
above  referred  to,  and  Kempson  v.  Sanders,  11  Bing.  5;  Red- 
field  on  Railways,  50,  no'e;  Hilliard  on  Sales,  j).  456,  §  37; 
Eaton  V.  Melius,  7  Gray,  566,  which  decides  that  there  is  an  im- 
plied warranty  that  the  assignor  has  done  nothing,  and  will  do 
nothing,  to  prevent  the  assignee  from  collecting  the  claim  assigned. 

So  there  is  an  implied  warrant}',  unless  it  is  otherwise  agreed, 
that  the  parties  to  the  instrument  are  sui  juris,  and  capable  of 
contracting:  Theall  v.  Newell,  19  Verm.  202  ;  Lobdell  v.  Baker, 
1  Mete.  193;  3  lb.  469;  Jones  v.  Crosthwaite,  17  Iowa,  393, 
and  cases;  2  Pars.  (U  Notes  and  Bills,  39;  but  no  implied 
warranty  of  their  solvency :  Chitty  on  Bills,  245;  2  Parsons  on 
Notes  and  Bills,  41;  Ei)ler  v.  Funk,  8  Pa.  St.  468;  Burgess -u. 
Chapin,  5  R.  I.  225.  So  there  is  an  implied  warranty  that  the 
instrument  transferred  has  not  been  pa«cZ.  And,  generally,  it  is 
laid  down  by  Mr.  Parsons  (2  Notes  and  Bills,  ch.  2,  p.  41),  who 
follows  and  closely  copies  Mr.  Chitty  (Chitty  on  B  lis,  247),  that, 
"  ill  all  cases  where  the  assignor  "  (we  may  add,  whethtr  by  de- 
livery or  by  indorsement,  made  "  without  recourse  "),  "  of  a  bill 
or  note  Jciwics  it  to  be  of  no  value,  and  the  assignee  receives  it  in 
good  faith  (not  aware  of  the  fact),  paying  a  valuable  considera- 
tion of  any  kind,  the  assignor  may  be  comi)elled  to  repay  or 
return  the  consideration  thus  received."  And  see  Burgess  v. 
Chapin,  R.  I.  225,  which  holds  an  assignor  without  indorsement 
to  be  liable  upon  the  ground  of  fraud  —  the  rule  of  caveat  emptor 
otherwise  applying. 
234 


CH.   VIII.]  THANSFKR    BY    INDORSEMENT.  ILL.   CAS. 

But,  in  all  such  cases,  the  action  ia  not  upon  the  paper  trans- 
ferred, but  against  the  vendor  or  transferrer  upon  and  for  the 
oiiginal  consideration  or  its  value,  or  for  the  fraud  practiced  ; 
and  the  latter  is  "  liable  to  tlie  vendee,"  to  use  the  language  of 
Ames,  C.  J.,  in  Al.lrich  v.  Jackson,  5  R.  I.  218,  "for  what  he 
has  received  from  him  on  the  ground  of  faihire  of  consideration." 
(Without  quoting,  see  2  Parsons  on  Notes  and  Bills,  37,  and  note  ; 
Kephart  v.  Butcher,  17  Iowa,  240;  Chilty  on  Bills,  246,  and 
authorities  cited;  Story  on  Notes,  §  117  (5th  ed.),  and  cases 
cited  in  notes  4  and  5  ;  Welch  v.  Lindo,  7  Cranch,  159  ;  Pretty- 
man -y.  Short,  5  Harring.  (Del.)  3G0 ;  Eaton  v.  Melius,  7  Gray, 
566,  holding  that,  in  absence  of  fraud  in  the  assignor,  the 
assignee  can  only  recover  of  him  the  amount  of  the  consideration 
paid  for  the  assignment,  with  interest). 

If  the  foregoing  views  are  correct,  it  follows  that  the  plaintiff, 
holding  simply  the  indorsement  of  the  Moore  note  "  without 
recourse,"  cjuld  not  sue  the  Chesires  on  the  indorsement.  His 
remed}^  if  he  could  not  make  out  a  case  upon  the  facts,  would 
be  a  special  one  against  Griffith,  of  whom  he  purchased  the 
note,  and  to  whom  he  made  payment  therefor.  So  Griffith's 
remedy  would  be  against  the  Chesires.  Under  our  statute,  it 
may  be  that  Griffith  might  specially  assign  his  cause  of  action 
against  Chesires  to  the  plaintiff;  but  the  mere  indorsement  of 
the  note  without  recourse  would  not  have  this  effect.  Such  an 
indorsement  operates  simply  to  transfer  tiie  title  to  the  note  — 
not  an  independent  cause  of  action.  The  demurrer  as  to  the 
first  count  of  the  petition  was,  beyond  doubt,  properly  sustained 
as  to  the  Chesires. 

And  if  we  are  right  in  considering  it  as  being  intended  as 
one  ui)()n  the  indorsement,  and  not  as  one  intended  and  adapted 
to  recover  tlic  consideiation  paid  for  the  note,  it  was  also  prop- 
erly sustained  as  to  Griffith.     Affirmed. 


Indorsements    in  Blank  —  Keforniation  of  Same — Lia- 
bility of  Indorser  Thereon. 

Farr  v.  Ricker,  46  Ohio  St.  265  (21  N.  E.  354). 

MiNSiiALL,  J.  The  suit  below  was  upon  tie  b'ank  indorsement 
of  a  promissory  note  by  the  defendant,  Ricker,  to  the  plaintiff, 
Farr.  The  petition  contained  the  necessary  averments  to  show 
the  liability  of  the  defendant  as  an  indorser  ;  but,  among  other 
defenses,  the  defendant  set  up  that  at  the  time  he  made  the 
indorsement  there  was  a  parol  agreement  between  them  that  he  was 
not  to  be  li:U)le  as  an  indorser;  in  other  words,  that  the  plaintiff 
was  to  take  tlie  note  without  recourse.  This  was  deni(  d  hy  the 
plaintiff,  and,  a  jury  having  Iteen  waived,  the  case  was  tried  to  the 
court,  which  found  for  the  plaintiff,  and,  after  a  motion  for  a  new 
trial  had  been  made  and  overruled,  rendered  judgment  f.ir  the 
plaintiff.     The  judgment  was  reversed  on  a  proceeding  in  error 

235 


ILL.   CAS.  TRANSFER    BY"    INDORSEMENT.  [CH.  VIII. 

by  the  circuit  court,  on  the  ground,  as  stated  in  the  entr^^,  that 
the  court  held  "  as  incompetent,  and  excluded  from  considera- 
tion, defendant's  verbal  evidence,  which  tended  to  show  that  he 
wrote  his  name  on  the  back  of  said  note  without  recourse,  or 
tended  to  show  a  verbal  agreement  between  said  parlies  that  de- 
fendant was  not  to  \<e  held  liable  as  an  indorser  on  said  note." 
Evidence  to  tliis  effect  had  been  introduced  by  the  defendant 
which  on  motion  was  ruled  out.  The  note  had  been  purchased  by 
the  plaintiff  of  the  defendant  for  value,  in  the  course  of  business, 
and  the  indorsement  was  made  to  transfer  the  title.  So  that  the 
case  presents  the  question  wh-ther  pu-olevidenceis  admissible  for 
the  purpose  of  varying  the  legal  effect  of  such  an  indorsement. 
There  has  been  some  conflict  in  the  decisions  as  to  this,  but  it  now 
seems  that  the  decided  weight  of  authority  is  against  its  admission 
for  such  purpose.  Its  admission  has  generally  been  placed  on 
the  ground  that  the  contract  of  indorsement  is  an  implied  one,  not 
in  writing,  and  so  not  within  the  rule  excluding  parol  evidenc  of- 
fered for  the  purpose  of  varying  th  i  terms  of  a  written  agreement. 
But  this  is  not  the  generally  received  opinion,  and  is  contrary  to 
the  usage  and  understanding  of  the  commercial  world.  It  is  said 
by  Justice  Matthews,  in  Martin  v.  Cole,  104  U.  S.  37  :  "  The  con- 
tract created  by  the  ind'  rsement  and  delivery  of  a  negotiable 
note,  even  between  the  immediate  parties  to  it,  is  a  commercial 
contract,  and  is  not  in  any  proper  sense  a  contract  implied  by 
the  law,  much  less  an  inchoate  or  imperfect  contract.  It  is  an 
express  contract,  an<l  is  in  writing,  snme  of  the  terms  of  which, 
according  to  tbe  custom  of  merchants  and  for  the  convenience 
of  commerce,  are  usually  omitted,  but  not  the  less  on  that 
account  perfectly  understood.  Ail  its  terms  are  certain,  fixed, 
and  definite,  and,  when  necessary,  supplied  by  that  common 
knowledge,  based  on  universal  custom,  which  has  made  it  both 
safe  and  convenient  to  rest  tlie  rights  and  obligations  of  parties 
to  such  instruments  upon  an  abbreviation.  So  that  the  mere 
name  of  an  indorser,  signed  upon  the  back  of  a  negotiable 
instrument,  conveys  and  expresses  his  me  ining  and  intention  as 
fully  and  completely  as  if  he  had  written  out  the  customary 
obligation  of  his  c  mtract  in  full."  And  it  was  there  held  that 
parol  evidence  is  not  competent  to  contradict  or  vary  the  legal 
effect  of  such  an  indorsement;  and  it  is  also  stated  that  the  cases 
in  sup|iort  of  the  rule  "are  too  numerous  for  citation."  Re- 
garding the  indorsement,  though  in  blank,  as  an  abbreviated 
written  agreement,  a'l  of  whose  terras  are,  by  usage  and  custom, 
made  definite  and  certain,  such  would  se  m  to  be  the  logical  result 
of  theprevious  decisions  of  this  court.  Thus  it  has  been  applied  in 
a  number  of  cases  to  tlie  making  of  a  note  (Titus  v.  Kyle,  10  Ohio 
St.  445.  Collins  v.  Insurance  Co.,  17  Ohio  St.  215);  and  to  the 
drawing  of  a  bill  (Cummings  v.  Kent,  44  Oliio  St.  92  ;  4  N.  E. 
Rep.  710);  and  also  to  the  acceptance  of  a  bill  (Robinson  v. 
Bank,  44  Ohio  St.  441 ;  8  N.  E.  Rep.  583).  There  are  some 
exceptions  to  the  rule.  It  is  competent  for  an  indorser  to  show, 
236 


CH.  VI II.]  TRANSFER    BY    INDORSEMENT  ILL.  CAS. 

as  against  his  indorsee,  that  llicy  became  i)arties  to  the  paper  for 
the  accommodatiou  of  the  maker,  or  some  other  party,  though  in 
so  doing  he  may  change  his  apparent  liabihty  to  his  indorsee. 
This  is  illustrated  by  the  early  case  of  Douglas  v.  Waddle,  1 
Ohio,  413,  and  numerous  cases  elsewhere,  on  the  giound  that 
such  evidence  does  not  vary  the  contract,  "  but,  admitting  its 
efficacy,  would  show  how  the  parties  had  agreed  to  bear  the  bur- 
den of  it,  if  need  were."  Bigelow  Cas.  Bills  &  N.  169.  It  is 
also  competuit  for  an  apparent  indorser,  as  against  his  immediate 
indorsee  or  one  with  notice,  to  show  that  his  indorsement  was 
without  consideration  ;  for  this  is  no  more  than  may  be  done  by  a 
maker,  drawer,  or  acceptor  under  like  circumstances.  Or  he  may 
show  that  his  name  was  i)laced  on  the  pa[)Lr  for  a  different  pur- 
pose than  to  transfer  the  title  to  the  indorsee.  The  ca^e  of 
Morris  v.  Faurot,  21  Ohio  St.  155,  cited  and  much  relied  on  by 
the  counsel  fc^r  defendant  in  error,  is  of  this  class.  That  such 
was  the  ground  of  the  decision  is  apparent  from  the  facts  and 
the  language  employed  by  the  judge  in  deliveiing  the  opin- 
ion of  the  court.  lie  says:  '■  A  blank  indorsement  which  evi- 
dences a  contract,  the  terms  of  which  cannot  be  contradicted  or 
varied  by  parol  testimony,  is  one  made  in  the  usual  course  of 
business,  for  the  purpose  of  transferring  the  title  of  or  giving 
credit  to  the  paper.  The  defense  in  this  case  was  that  no  transfer 
of  title  was  intended,  nor  was  credit  intended  to  be  given  tiiis 
note  by  the  transaction,  but  that  it  wns  paid  and  discharged  by 
the  makers  through  ai)d  by  the  j^laintiff,  who  was  actiug  for  them 
and  at  their  request,"  and  tliat  t'le  defendant  simply  indorsed  his 
name  on  the  note  to  enable  tiie  plaintiff  to  show  the  makers  that 
he  had  paid  it.  The  case  of  Hudson  v.  Walcott,  81)  Oliio  St. 
618,  also  falls  within  this  distinction.  The  name  of  Burt,  who 
was  sought  to  b  i  made  liable  as  indorser,  iiad,  for  the  [mi pose  of 
collection  by  the  savings  bank,  been  in  lorsed  on  the  note  some 
months  before  its  transfer  to  Hudson,  and  tlie  issue  was  whether 
this  indorsement  had  been  adopted  in  the  transfer  of  the  note  to 
Hudson.  Burt  claimed  that  liy  the  agreement  Hudson  was  to  take 
it  without  recourse,  and  that  the  omission  to  erase  the  indorse- 
ment was  an  oversight.  It  was  held  that  he  might  do  so. 
Morris  v.  Faurot  is  cited  and  relied  on,  which  shows  that  the 
judge  did  n  it  intend  to  announce,  as  the  facts  of  the  case  did 
not  require,  any  rule  different  from  that  applied  in  the  former 
case. 

A  further  exception  is  made,  that  is  more  apparent  than  real, 
in  favur  of  the  indorsee,  i)y  which  he  is  permitted  to  show  a 
parol  waiver  of  demand  and  notice.  The  cases  of  Dye  v.  Scott, 
35  Ohio  St.  194,  and  the  second  branch  of  Hudson  v.  Walcott, 
supra,  are  of  this  character;  and  also  McMonigal  v.  Brown,  4b 
Ohio  St.  499;  15  N.  E.  Rep.  8G0.  The  exception  is  on  the 
ground  that  demand  and  n<jtice  are  not  a  part  of  ti.e  contract,  luit 
a  mere  stop  in  the  remedy,  which  may  be  waived  by  the  imloisi  r. 
Byles  Bills  (6th  Amer.   cd.),  Sharswood's  notes,   160;  Basf^en- 

237 


ILL.  CAS.  TRANSFER   BY    INDORSEMENT.  [CH.  VIII. 

horst  V.  Wilby,  45  Ohio  St.  333,  339  ;  13  N.  E.  Rep.  75  ;  1  Pars. 
Notes  &  B,  549.  The  limits  fixed  by  these  exceptions  confine  the 
rule  to  an  indorsement  made  for  value  in  the  usual  course  of  bus- 
iness for  the  purpose  of  transferring  the  paper  or  giving  it  credit; 
and  within  these  limits  the  rule  is  general  that  a  contract  of  in- 
dorsement as  interpreted  by  mercantile  law,  though  in  blank, 
cannot  be  varied  by  parol  evidence  of  what  was  then  agreed  on 
by  the  parties.  The  case  of  Bailey  v.  Stoneman,  41  Ohio  St.  148, 
is  claimed  to  be  opposed  to  this.  The  indorsement  sued  on  in 
that  case  had  been  made  in  performance  of  a  previous  contract 
for  building  a  house.  The  builder  had  agreed  to  take  the  note 
secured  by  mortgage  in  part  payment  for  his  work.  The  house 
was  built  and  the  indorsement  made  according  to  the  previous 
agreement.  The  plaintiff,  a  subsequent  indorsee,  knew  the  facts. 
The  court  held  tliat,  the  indorsement  being  in  blank,  parol  evidence 
of  what  was  said  hy  the  parties  in  and  about  the  transfer  was  prop- 
erly admitted.  If  this  case  can  be  construed  to  hold  that  such  evi- 
dence of  a  parol  agreement  made  at  the  time  of  an  indorsement 
for  the  purpose  of  varying  its  effect  is  admissible,  it  is  contrary 
to  the  subsequent  case  of  Cummings  v.  Kent,  supra;  for  it  is 
there  held  that  such  evidence  is  not  competent  for  the  purpose  of 
varying  the  liability  of  a  drawer  of  a  bill,  and  the  drawer  of  a 
bill  is,  according  to  mercantile  law,  the  same  as  the  indorser  of  a 
note,  or,  in  other  words,  every  indorser  of  a  note  is  regarded  as 
the  drawer  of  a  new  bill.  And,  as  Cummings  v.  Kent  is  the  later 
case,  the  rule  establislied  by  it  should  be  followed  until  it  is 
overruled.  We  are  virtually  asked  to  do  so ;  but  this  we  are 
not  disposed  to  do,  as  it  is  supported  by  not  only  what  seems  to 
be  the  better  reason,  but  also  the  greater  weight  of  authority. 
Bigelow  Gas.  Bills  &  N.  168,  §  3;  Byles  Bills  (7th  Amer.  ed., 
Sharswood),  101,  note  1  ;  Whart.  Ev.,  §  1059,  note  2  ;  Benjamin's 
Chalmer's  Dig. ,  art.  56  ;  and  cases  cited  in  Cummings  v.  Kent, 
44  Ohio  St.  97;  4  N.  E.  Rep.  710;  Castle  v.  Rickly,  44  Ohio  St. 
490 ;  9  N.  E.  Rep.  136.  That  an  indorsement  may  be  reformed 
in  equity  on  the  ground  of  accident,  fraud,  or  mutual  mistake,  as 
any  other  written  agreement,  so  as  to  make  it  conform  to  the  real 
intention  of  the  parties,  will  not  admit  of  much  doubt.  In  the 
case  of  IMcElwain  v.  Merchants'  &  Farmers'  Bank,  decided  by 
this  court  at  the  January  term,  1887,  but  not  reported,  in  which 
the  defendants  below,  who  had  been  sued  upon  a  note  signed 
in  their  individual  capacities,  answered,  by  way  of  cross-peti- 
tion, that  by  mutual  mistake  the  note  had  been  so  signed,  when 
by  the  agreement  of  the  parties  it  should  have  been  made  the 
note  of  the  association  of  which  they  were  directors,  and  asked 
for  a  reformation,  it  was  held  that  the  action  was  appealable ; 
which,  under  our  practice,  was  simply  a  holding  that  the  parties 
wei'e  entitled  to  the  relief  they  asked,  in  case  the  averments  were 
supported  by  proper  proof.  But  such  remedy  must  have  been 
obtained,  either  by  a  suit  for  that  purpose  or  by  a  cross-petition 
in   action   on    the  indorsement,  before  it  can  be  relied  on  as  a 

238 


CH.  VIII.]  TUANSFEK    BY    INDORSEMENT.  ILL.  CAS. 

ground  of  defense.  lu  such  case  the  issue  is  triable  by  the 
court,  and  must  be  sustained  by  clear  and  convincing  proof,  as  in 
all  similar  cases,  before  the  reformaliou  can  be  had.  This 
remedy  affords  a  sufficient  protection  against  any  possible  wrong 
that  may  result  from  the  rule  at  law,  and  adequately  protects  the 
holder  of  negotiat)le  paper.  There  was  no  averment  of  any  mis- 
take or  fraud  contained  in  the  answer,  and  no  reformation  was 
asked;  and  the  evidence  introduced,  and  not  considered  by  the 
court,  was  insufficient  to  warrant  a  reformation,  had  it  been 
asked.  It  consisted  <  if  the  evidence  of  tlie  defendant  contradicted 
by  that  of  the  plaintiff;  so  that,  were  we,  under  the  liberal  princi- 
ples of  our  Code,  to  re'j;ar<l  tlie  answer  as  in  the  nature  of  a  cross- 
petition  for  a  reformaiion  of  the  indorsement,  which  it  is  not,  still 
the  refusal  of  the  court  to  consider  the  evidence  could  not  be 
assigned  as  a  ground  of  error,  since,  had  it  been  considered,  it 
would  have  been  the  duty  of  the  court,  by  reason  of  the  insuffi- 
ciency of  the  evidence,  to  deny  tlie  relief;  and  it  alone  was  the 
proper  tribunal  to  consider  it.  Hence,  in  any  view,  thtre  was  no 
error  to  the  prejudice  of  any  substantial  right  of  the  party  in  the 
ruling  of  the  court.  Judgment  of  the  circuit  court  reversed,  and 
that  of  the  common  pleas  affirmed. 


Restrictive  Indorsement  —  Cancellation  of  Same,  Fol- 
lowed by  Absolute  Indorsement  —  Notice  to  Subse- 
quent Holder. 

People's  Bank  v.  Jefferson  Co.  Sav.  Bank,  106  Ala.  624  (17  So.  728). 

Appeal  from  city  court  of  Birmingham;  W.  W.  Wilkerson, 
Judge. 

Action  of  assumpsit  by  the  People's  Bank  of  Lewisburg  against 
the  Jefferson  County  Savings  Bank.  From  a  judgment  for 
defendant,  plaintiff  appeals.     Reserved. 

Coleman,  J.  The  ap|)ell:uit  bank  sued  the  defendant  in 
assumpsit  for  money  had  and  received.  The  evidence  is  without 
conflict,  and  we  will  state  the  facts  substantially  which  gave  rise 
to  the  demand.  On  the  l7th  day  of  March,  1893,  R.  A.  Wilkes 
drew  a  check  as  follows : — 

"  $750.00.     Birmingham,  Ala.,  March  17th,  1893. 
"  At  sight,  |)ay  to  order  of  Beatty  &  Orr  seven  hundred  and 
fifty  dollars,  value  received,  and  charge  to  the  account  of 

"R.  A.   Wilkes. 
'*  To  Tennessee  Packing  Co.,  Birmingham,  Ala." 

Written  across  the  face  of  the  draft  was: — 

"  Accepted.  Pa3'able  at  Jefferson  County  Savings  Bank, 
Birmingham,  Ala.  "Tenn.  Pa'g  Co., 

"  By  R.  A.  Wilkes." 
239 


ILL.  CAS.  TRANSFER    BY    INDORSEMENT.  [CH.  VIII. 

It  was  indorsed  as  follows,  with  erasures:  — 

"  Beatty  &  Orr." 
"  No.   510. 


Pay  to  tho  ordor  of  F.  Poi-tcrfif^-l  Caa.   for  ool^cotioQ  only 
it  Pc^jploo  BidIi  of  Lowi9bupg  ronn. — 

R. -A^McCord ,  Caah." 

This  indorsement,  as  erased,  was  followed  by  the  following 
indorsement: — 

"Pay  Commercial  Nat'l  Bank,  Nashville,  Tenn.,  or  order  for 
account  of  Peoples  Bank  Lewisburg,  Tenn. 

"  R.  A.  McCord,  Cash." 
"No.  17925. 

"  Pay  to  the  order  of  Jeff.  Co.  Sav.  Bk.  for  collection  only 
for  acct.  "  Commercial  Nat'l  Bank, 

"  Nashville,  Tenn. 
"F.  Porterfield,  Cash." 

The  draft  was  paid  to  the  Jefferson  County  Savings  Bank  on 
March  25,  1893,  and  by  that  bank  placed  to  the  credit  of  the 
Commercial  National  Bank,  and  notice  of  the  collection  and 
credit  mailed  to  the  Commercial  National  Bank  within  banking 
hours  on  the  same  day.  On  the  day  of  the  payment  of  the  draft 
in  Birmingham, —  the  25tli  of  March,' — the  Commercial  Bank, 
doing  business  in  Nashville,  Tenn.,  closed  its  doors,  and  ceased 
to  do  business.  The  Jefferson  County  Savings  Bank  ha<l  no 
notice  of  its  failing  condition  until  after  the  collection 
of  the  draft,  and  notice  of  the  collection  and  credit  had 
been  mailed.  At  the  time  of  its  failure  the  Commercial  Bank 
was  indebted  to  the  Jefferson  County  Savings  Bank  in  excess  of 
the  amount  collected  and  credited.  The  draft  was  sent  by  the 
Commercial  Bank  to  the  Jefferson  Count}'  Savings  Bank  in  a 
letter  which  stated  that  the  draft  was  sent  for  collection  and 
credit. 

The  question  is  whether  the  money,  when  collected,  belonged 
to  the  plaintiff  bank,  of  which  fact  the  collecting  bank  ha  I  notice, 
or  was  it  the  money  of  the  Commercial  Bank,  and,  under  the 
written  authority  contained  in  its  letter,  or  the  usage  of  the  banks, 
did  the  collecting  bank  have  authority  to  credit  the  amount  col- 
lected inpayment  of  the  indebtedness  due  it  from  the  Commercial 
Bank?  The  cashier  of  the  plaintiff  bank  testified  that  plaintiff 
had  an  arrangement  with  the  Commercial  Bank  with  regard  to 
drafts  sent  to  it  by  plaintiff,  to  the  effect  that  when  the  drafts 
were  collected,  and  amounts  reported,  and  placed  to  credit  of 
plaintiff,  the  latter  would  draw  for  the  amount,  but  not  before  it 
was  reported  collected  ;  and  that  no  report  of  the  collection  of 
the  draft  was  ever  made  by  the  Commercial  Bank,  nor  the  amount 
placed  to  plaintiff's  credit;  that  plaintiff  bank  never  diew  against 
the  amount  of  the  draft;  that  at  no  time  was  plaintiff  bank 
indebted  to  the  Commercial  Bank ;  that  it  had  been  forwarded 

240 


CH.  Vlir.]  TRANSFER    liY    INDORSEMENT.  ILL.  CAS. 

simply  for  collection,  and  so  entered  on  their  books ;  and  that 
plaintiff  was  the  ownor  of  the  draft,  and  never  parted  with  its 
title.  Unless  plaintiff's  rights  were  lost  or  waived  by  virtne  of 
the  indorsements,  or  its  agreement  with  the  Commercial  Bank, 
expressly  or  impliedly,  the  plaintiff,  in  our  opinion,  was  entitled 
to  recover.  We  attach  no  importance  to  the  canceled  indorse- 
ment. The  indorsement  and  cancellation  were  made  by  plaintiff 
before  the  transmission  of  the  draft  for  collection.  The  unerased 
indorsements  determined  the  legal  relations  of  the  pai  tics.  The 
indorsement  by  plaintiff,  "Pay  Commercial  National  Bank  or 
order  for  account  of  People's  Bank  of  Lewisburg,"  according  to 
all  the  authorities,  gave  notice  that  the  paper  was  the  property  of 
the  Peo[>le's  Bank,  that  it  claimed  the  money  due  upon  it,  and 
that  it  was  no  longer  negotialile  paper.  No  one  could  purchase 
the  instrument  with  th's  indorsement,  and  claim  protection  as  an 
innocent  jiurciiaser  against  the  true  owner.  Whosoever  under- 
took to  collect  this  pni)er  thus  indorsed,  whether  acting  as  the 
agent  of  tiie  owner  or  the  agent  of  the  agent,  knew  that  the 
money,  when  collected,  ex  aequo  et  bono,  would  belong  to  the 
owner  of  the  paper.  Any  appropriation  of  it  otherwise,  with- 
out the  consent  of  the  owner,  woul(i  be  unauthorized. 
This  we  understand  to  be  the  distinction  between  the  legal 
effect  of  a  restricted  indorsement,  such  as  "  for  collection,"  or 
"  on  account  of,"  and  a  gener:il  indorsement  in  blank,  or  "  Pay 

to ,"  without  restrictive  words.     When  the  defendant  bank 

received  the  draft  for  colhction,  and  collected  the  money,  it  well 
knew,  from  the  restricted  indorsement,  if  there  was  no  other 
agreement,  that  it  belonged  to  the  plaintiff,  and  not  the  Commer- 
cial Bank,  and  that  the  Commercial  Bank  had  no  title  to  it,  nor 
any  power  to  authorize  the  defendant  l)ank  to  ap[)ly  it  or  its  pro- 
ceeds to  the  i)ayment  of  an  indebtedness  due  it  from  the  Com- 
mercial Bank.  As  between  the  owner  and  the  collecting  bank,  the 
latter  collected  upon  the  terms  and  conditions  expressed  by  the 
indorsement,  irrespective  of  any  understanding  or  agreement  that 
may  have  existed  belwe(  n  it  and  its  principal,  the  agent  of  the 
owner.  It  couM  not  acqui»-e  a  right  which  its  principal  did  not 
possess,  and  it  knew  its  principal  was  a  mere  a-jent  of  the  owner, 
for  collection.  No  person  or  corpora' ion  has  any  authority  to 
apply  money  or  property  received  and  held  by  its  debtor  as  agent 
or  upon  trust,  with  knowledge  of  the  fact,  in  satisfaction  of  the 
debts  of  such  agent.  There  is  no  question  of  an  innocent  pur- 
chaser for  value  in  the  case. 

It  is  contended  for  appellant  that  under  the  agreement  and 
course  of  dealing  between  the  plaintiff  and  its  agent,  the  Com- 
mercial Bank  of  Nashville,  as  soon  as  the  money  was  col- 
lected by  the  latter,  the  relation  of  debtor  and  creditor 
arose,  and  the  ownership  of  the  money  vested  in  the  Com- 
mercial Bank,  and  the  collection  of  tlie  money  by  the  de- 
fendant and  crediting  it  upon  the  indel)t"dness  of  the  agent  bank 
was,  in  law,  the  transmission  of  the  money  to  the  agent  bank,  as 

ir.  '  241 


ILL.   CAS.  TRANSFER    BY    INDORSEMENT.  [CH.  VIII. 

much  so  as  if  actually  placed  in  its  vaults,  and  had  the  effect  to 
create  the  relationship  of  debtor  and  creditor  between  plaintiff 
and  the  Commercial  Bank.  The  plaintiff,  by  its  restricted  in- 
dorsement, gave  notice  to  the  Commercial  Bank  and  the  defend- 
ant that  the  draft,  or  the  money  when  collected,  belonged  to  it. 
No  agreement  between  the  Commercial  Bank  and  the  defendant, 
nor  any  method  of  bookkeeping  nor  of  keeping  accounts  current, 
could  divest  the  owner  of  its  title  to  the  draft  of  its  proceeds. 
There  are  statements  in  some  opinions  of  courts  of  high  standing 
seemingly  in  conflict  with  our  conclusion,  but  an  examination  of 
the  facts  of  these  cases  will  show  the  principle  of  law  applied  is 
not  applicable  to  the  present  case.  In  tlie  case  of  Bank  v.  Arm- 
strong, 148  U.  S.  60;  13  Sup.  Ct.  533,  where  the  indorsement  was 
"For  collection,"  Mr.  Justice  Brewer,  delivering  the  opinion  of 
the  court,  declared  that,  as  to  the  drafts  which  had  been  for- 
warded by  the  Fidelity  Bank  for  collection  to  its  agents,  and  which 
were  not  collected  until  after  notice  of  its  insolvency,  the  collect- 
ing banks,  in  making  collections,  acted  as  the  agents  of  the  owner 
of  the  drafts,  and  not  as  the  agents  of  the  Fidelity  Bank  ;  that,  as 
to  drafts  collected  before  the  insolvency  of  the  Fidelity  Bank  had 
been  disclosed,  and  which  had  been  credited  by  the  subagents 
upon  the  drafts  of  the  Fidelity  Bank  to  them  before  notice  of  its 
insolvency,  under  the  facts  of  the  case,  the  collecting  bank  of 
subagent  was  not  liable  to  the  owner.  The  cuurt  agreed  with  the 
conclusions  of  the  trial  court,  which  held  that  "  the  collection  had 
been  fully  completed,"  and  that  the  credit  to  the  Fidelity  Bank 
"  was  the  same  as  though  the  money  had  actually  reached  the 
vaults  of  the  Fidelity  Bank."  The  facts  of  the  case  as  stated  in 
the"  opinion  showed  that  there  was  an  agreement  between  the 
plaintiff  and  the  Fidelity  Bank  that  the  latter  was  to  i  emit  the  1st, 
11th,  and  21st  of  each  month.  Collections  intermediate  these 
dates  were,  by  the  custom  of  banks  and  the  understanding  of  the 
parties,  to  be  mingled  with  the  general  funds  of  the  Fidelity,  and 
used  in  its  business.  By  the  arrangement  as  ioiniermedi:ite  col- 
lections, the  relation  of  debtor  and  creditor  exi-ted.  The  Fidelity 
Bank  became  the  owner  of  the  money,  and  was  a  debtor  to  the 
plaintiff.  We  are  of  opinion  that  the  court  based  the  con- 
clusion that  the  subagent  was  not  liable  to  the  plaintiff  upon 
the  fact  that  the  money,  when  collected  and  credited  under 
the  arrangement  made  with  the  plaintiff,  was  the  money  of 
the  Fidelity,  and  not  the  money  of  the  plaintiff.  It  was  the 
agreement  between  the  plaintiff  and  its  agent  that  remittances 
were  to  be  made  at  stated  periods  only,  and  in  the  meantime 
the  Fidelity  Bank  had  the  right  to  use  the  money  in  its  busi- 
ness, which  terminated  the  ownership  of  the  plaintiff  as  soon  as 
the  money  was  collected  by  the  Fidelity,  and  created  the  relation- 
ship of  debtor  and  creditor.  In  discussing  the  question  of  col- 
lections by  a  subagent  before  and  after  "  avowed  insolvency  "  of 
the  principal  agent,  the  court  was  of  opinion  that  the  fact  of 
collection  by  a  subagent  before  notice  of  insolvency  of  its  prin- 

242 


CH.  VIII.]  TRANSFER    BY    INDOHSEMENT.  ILL.   CAS. 

cipal  was  "  not  decisive"  of  its  liability  to  the  owner,  and  the 
decision  was  rested  mainly  upon  the  ovvner  and  its  agent,  by 
which  the  relation  of  debtor  and  creditor  was  established  be- 
tween the  days  of  remittances.  In  th'^  case  of  White  v.  Bank, 
102  U.  S.  G58,  the  indorsement  was,  "  Pay  S.  V.  White  or  order 
for  account  of,"  etc.  The  court  declared  that  the  "  indorsement 
is  without  ambiguity,  and  needs  no  exiilanation,  either  by  parol 
proof  or  resort  to  usaj;e.  The  phun  meaning  of  it  is  that  the 
acceptor  of  the  draft  is  to  pay  it  to  the  indorsee  for  the  use  of 
the  indorser.  The  intloisee  is  to  receive  it  on  account  of  the 
indorser.  It  does  not  jiurport  to  transfer  the  title  of  the  paper, 
or  the  ownership  of  the  money  when  received.  Both  these  re- 
main, by  the  reosonable  and  almost  necessury  meaning  of  the 
language,  in  the  indorser."  In  tlie  cse  of  liank  ?;.  Ilubbell,  117 
N.  Y.  384,  39G;  22  N.  E.  1031,  the  same  distinction  and  rule  is 
declared  as  held  in  148  U.  S.,  13  8up.  Ct.,  supra.  The  court 
says:  "The  lirm,  l)y  the  arrangement,  had  the  right  to  retain 
the  moneys,  and  to  remit  weekly ;  and,  of  course,  from  one 
week  to  another,  it  had  tlie  right  to  use  the  money,  and 
the  plainiiff  relied  upon  the  credit  of  the  firm  for  such  time 
as  it  had  the  right  to  retain  the  money."  In  the  case  of 
Mechanics'  Bank  v.  Valley  Packing  Co.,  70  Mo,  643,  the 
indorsement  was  "Pay  to  D.  or  order  for  collection  for 
account  of  C."  The  court  held  "  that  the  restrictive  indorse- 
ment destioyed  the  negotiability  of  the  bill,  and  operated  as  a 
mere  authority-  to  receive  the  proceeds  for  the  use  of  the 
indorser."  In  the  case  of  Dorchester  &  Milton  Bank  v.  New 
Kngland  Bank,  1  Cash.  177,  the  distinction  between  an  indorse- 
ment in  blank  and  a  restrictive  indorsement  is  fully  declared. 
Maiuifaclureis'  Nat.  Bank  v.  Continental  Bank,  12  Am.  St.  Rep. 
598,  148  Mass.  553,  20  N.  E.  193;  PVeeman's  Nat.  Bank  v. 
National  Tube  Works,  21  Am.  St.  Rep.  4G1,  151  Mass.  413,  24 
N.  E.  779. 

We  are  of  opinion  the  distinction  is  clear,  and  the  rule  sound. 
Without  it,  ownership  of  the  draft  und  money  would  be  divested 
against  the  express  contract  of  the  indorsement,  and  without  fault. 
Tlie  case  of  Bank  v.  Weiss,  07  Tex.  331,  3  S.  W.  299,  lays  down 
the  broad  rule  tliat,  where  a  bank  or  peison  collects  money  upon  a 
draft  sent  to  it  by  the  bank  to  which  it  was  indorsed  for  collec- 
tion by  the  owner,  with  a  rcsiricted  indorsement,  the  agent  col- 
lecting the  money  holds  it  in  trust  for  the  owner,  and  has  no 
authority  to  ai)ply  it  to  the  paNment  of  any  indelitedness  due 
from  tlie  forwaniing  bank,  and  that  without  reference  to  the 
question  of  notice  of  its  insolvency.  The  agreement  l)etween  the 
plaintiff  in  the  case  at  bar  and  the  Commercial  Bank  did  not 
auihorizr  tin;  latter  to  use  the  plaintiff's  money  at  ari}'  time  in  its 
bnsine.-s.  A-«  soon  as  collected,  itw.is  the  duty  of  tlie  C  mraer- 
ci:il  Bmk  to  notify  the  plaintiff  of  thti  collection,  and  tin  n  plain- 
tiff would  draw  it  out.  According  to  the  facts  of  the  case,  the 
collection  was   never  credited    to  plaintiff,  and  the  Commercial 

243 


ILL.   CAS.  TRANSFER    BY    INDORSEMENT.  [CH.  VIII. 

Bank  ceased  to  do  business,  and  its  agency  tei'minated  by  insol- 
vency before  its  contract  with  plaintiff  was  completed.  We  are 
of  opinion  under  the  facts  of  this  case  the  plaintiff  was  entitled 
to  recover,  and  a  judgment  will  be  here  rendered  to  that  effect. 
Reversed  and  rendered. 


Irregular  Indorsement  for  Acconmiodation  —  Restric- 
tive Indorsement  for  Collection  —  Such  Indorsee  Agent 
of  Indorser. 

Blakeslee  v.  Hewitt,  70  Wis.  341  (44  N.  W.  1105). 

Appeal  from  circuit  court,  Clark  county;  A.  W.  Newman, 
Judge. 

Aciion  by  Maria  S  Blakeslee  agaiust  James  Hewitt  and  others, 
on  a  promissory  note.  From  the  judgment  for  plaintiff,  defend- 
ants appeal. 

Cole,  C.  J.  The  undisputed  evidence  in  this  case  shows  that 
all  the  indorsers  signed  the  note  u[)on  which  suit  is  brought  before 
its  delivery  to  the  payee,  to  give  credit  to  the  maker,  Colburn. 
This  is  the  effect  of  the  testimony  of  Ring  ami  Youmans,  The 
former  says,  in  substance,  that  it  was  understood  that  tlie  indorsers 
should  indorse  the  note  to  give  Colburn  credit  for  the  purchase  of 
the  mill  property,  and  that  he  indorsed  as  he  agreed  to.  Youmans 
says  he  knew  Colburn's  signature  and  the  other  signatures  on  the 
back  of  the  note ;  that  they  were  the  signatures  of  the  defendants 
Hewitt,  Archer,  Ring,  and  Youmans.  The  reason  they  signed 
as  indorsers  was  as  an  accommodation  to  give  credit  to  Colburn. 
Under  these  circumstances,  they  became  liable  to  the  paj'ee  as 
indorsers.  That  is  the  rule  laid  down  by  this  court  in  Cady  v. 
Shepard,  12  Wis.  639.  It  has  been  followed  in  other  cases. 
Davis  V.  Barron,  13  Wis.  254;  Snyder  v.  Wright,  Id.  689;  King 
V.  Ritchie,  18  Wis.  555;  Frederick  v.  Winans,  51  Wis.  472,  8 
N.  W.  Rep.  301.  It  is  idle  to  say,  in  the  face  of  this  testimony, 
which  is  undisputed,  that  there  is  no  proof  to  show,  when  Hewitt 
and  Archer  indorsed  the  note,  whether  it  was  before  or  after 
delivery  to  the  payee,  or  that  they  indorsed  it  to  give  credit  to  the 
maker.  The  testimony  is  clear  and  satisfactory  that  they  and  the 
other  indorsers  indorsed  it  before  delivery  for  the  very  purpose 
of  giving  credit  to*  the  maker,  and  they  should  be  held  to  their 
contract.  The  sssuraption  that  they  might  have  signed  as  second 
indorsers  on  the  responsibility  of  the  payee,  is  in  conflict  with  all 
the  facts  proven. 

Another  objection  taken  is  that  there  was  no  proof  of  a 
proper  demand  of  payment  and  notice  of  dishonor  given.  The 
note  was  made  payable  at  the  Clark  County  Bank  at  Neills- 
ville.  The  cashier  of  that  bank,  who  was  a  notary  public, 
duly  demanded  payment  of  the  note  at  the  bank,  and  pro- 
tested the  same  for  non-payment,  and  gave  immediate  notice 
to  each  of  the  indorsers.  It  appears  that  the  note  had  been 
244 


CH.  VIII.]  TRANSFER    BY    INDORSEMENT.  ILL.   CAS. 

left  with  a  bank  at  Sparta,  doubtless  for  collection,  and  was 
sent  by  the  latter  bank  to  the  Clark  County  Bank  for  the  same 
purpose.  It  is  said  tliat  it  did  not  appear  that  the  cashier  of  the 
Clark  County  Bank  iiad  any  authority  fiom  the  payee  to  present 
the  note  for  payment.  But  the  facts  show  that  there  was  an 
implied  authority  for  the  Sparta  bank  to  send  the  note  to  the 
Clark  County  Bank  for  collection,  as  was  done.  This  authority 
is  implied  from  the  facts  of  the  case,  and  it  was  so  decided  in 
Stacy  V.  Bunk,  12  Wis.  629.  The  Clark  County  Bank  was 
unquestionably  the  agent  of  the  Sparta  Bank  to  collect  the  note 
for  the  owner  thereof.  Marine  Bank  v.  Fulton  Bank,  2  Wall. 
252;  Ward  v.  Smith,  7  Wall.  447.  Where  a  bank  is  designated 
for  the  payment  of  a  note,  the  common  usage  is  for  the  holder  to 
send  it  to  such  bank  for  collection,  and  the  party  bound  for  its 
payment  can  call  and  take  it  up.  Umler  such  circumstances,  the 
bank  becomes  the  agent  of  the  payee  to  receive  payment.  Ward 
V.  Smith,  supra.  This  doctrine  is  elementary,  and  no  authority 
need  be  cite<l  to  sustain  it. 

But  it  is  further  insisted  the  court  erred  in  excluding  the  evi- 
dence offered  to  show  when  the  action  was  commenced  that  Ring 
and  Archer  had  offsets  against  Chaunce}'  Blakeslee,  in  the  way 
of  unpaid  notes.  The  ruling  of  the  court  in  excluding  this 
evidence  was  manifestly  correct,  for  several  reasons.  In  the 
first  place,  no  set-off  was  pleaded  in  the  answer,  so  there  was 
no  foundation  laid  for  such  proof.  Besides,  Chauncey  Blakeslee 
was  not  a  party  to  the  suit.  The  note  was  made  payable  toMari- 
S.  Blakeslee,  presumably  the  holder  and  owner,  and  in  whose 
name  the  action  was  brought.  It  is  suggested  that  the  mill 
property,  which  was  the  consideration  of  the  note,  was  the  prop- 
erty of  Cliauncey  Blakeslee.  But  what  if  it  was.''  Non  constat 
but  Mrs.  Blakeslee  was  the  real  owner  of  the  note  for  a  valuable 
consideration.  She  may  have  advanced  money  to  her  husband 
for  it,  or  he  may  have  given  it  to  her.  At  all  events  she  is  the 
party  to  the  record,  and  prima  facie  is  the  real  owner,  who  is 
entitled  to  recover  it.  There  was  no  question  in  the  case  to 
submit  to  the  jury,  and  the  circuit  judge  properly  directed  a 
verdict  for  the  plaintiff.  The  judgment  of  the  circuit  court  is 
affirmed. 

245 


CHAPTER     IX. 

THE  EIGHTS  OF  BONA.  FIDE  HOLDERS. 

Section    93.  Who  is  a  bona  fide  holder. 

94.  What  defenses  will  and  will  not  prevail  against  bona  fide 

holders  —  General  statement. 

95.  Instruments  void  for  want  of  delivery. 

96.  Blank  instruments  delivered  to  accent  and  filled  up  in  viola- 

tion of  instructions. 

97.  Bill  or  note  written  over  a  blank  signature. 

98.  Bills  or  notes  executed  by  mistake  or  under  false  repre- 

sentations. 

99.  Bills  and  notes  executed  under  duress. 

100.  Estoppel  as  affecting  defenses  against  bona  fide  holders. 

101.  What  is  meant  by  6onffl.;^fZe. 

102.  Bona  fide  holder  must  be  a  holder  for  value. 

103.  When  inadequacy  of  price  constructive  notice  of  fraud. 

104.  Inadequacy  of   price   for  indorsement  as  affected  by  laws 

against  usury. 

105.  Inadequacy  of  price,   as   affecting  amount  which  may  be 

recovered  of  primary  obligor  and  indorser. 

106.  Usual  course  of  business. 

107.  Transfer  before  and  after  maturity. 

108.  Paper  payable  on  demand  or  at  sight  when  overdue. 

109.  Transfer  after   default   in   the  payment  of  installment  of 

principal  or  interest. 

110.  Transfer  on  last  day  of  grace,  or  day  of  maturity. 

111.  Actual  and  constructive  notice  of  defenses. 

112.  Notice  by  lif<  pendens. 

113.  Burden  of  proof  as  to  bona  fide  ownership. 

§  93.  Who  is  a  bona  fide  holder. —  At  the  present  day, 
the  chief  distinction  of  negotiable  paper  is  the  peculiar  and 
superior  title  which  may  be  acquired  in  such  paper  by  one 
who  is  known  as  a  bona  fide  holder;  and  it  is  this  which 
makes  the  negotiable  bill,  note  or  check,  so  valuable  an 
aid  to  exchange.  Tersely  stated,  the  bona  fide  \\o\(\cy  takes 
such  a  bill  or  note,  free  from  defenses  not  appearing  on 
the  face  of  the  paper  ;  and  he  may  recover  on  it,  notwith- 
standing such  defenses  might  have  been  set  up  by  the 
246 


CJI.   IX.]  RIGHTS    OF    BONA    FIDH    HOLDERS.  §    93 

primary  obligor,  if  the  action  htul  bt-eu  brought  by  Ihe 
original  payee,  or  by  a  subsequent  transferee,  who  is  not 
a  bona  fide  holder. 

The  general  rule  may  be  stated  thus:  A  holder  of  nego- 
tiable paper  who  has  taken  it  (  1 )  bona  fide,  (2)  without 
notice  of  dishonor  and  existing  defenses,  (3)  for  a  valual)Ie 
consideration,  (4)  in  the  usual  course  of  business,  (5)  and 
before  maturity,  can  successfully  enforce  the  obligation  of 
the  bill  or  note  against  the  acceptor,  maker,  drawer  and 
l)rior  indorsers,  notwithstanding  the  existence  of  defenses, 
not  appearing  on  the  face  of  the  paj)er,  which  might  be 
set  up  against  some  prior  obligee  or  holder. 

But  in  explaining  the  doctrine  of  bona  fide  ownership, 
as  a  superi()r  claim  to  the  enforcement  of  a  bill  or  note, 
against  which  ii  good  defense  could  be  set  up  by  the 
primary  obligor  if  the  action  had  been  brought  by  the 
payee  or  some  prior  indorsee,  it  must  always  be  remem- 
bered that  bona  fide  ownership  is  an  incident  of  negotiable 
paper,  which  inures  to  the  benefit  of  sul)sequent  trans- 
ferees, as  well  as  to  the  person  who  can  in  his  own  person 
claim  to  be  in  every  ies[)ect  a  bona  fide  holder.  The  bona 
fide  holder  can  transfvr  ju-t  as  good  a  title  as  he  has  him- 
self, even  to  one  who  cannot  himself  claim  to  be  a  bona  fide 
holder.  So  that  il',  at  any  ))oint  in  the  chain  of  transfers 
from  the  payee  to  the  present  holder,  a  bona  fide  owner- 
ship can  be  established,  the  maker  of  a  note,  acceptor  or 
drawer  of  a  bill  or  earlier  indoiser,  cannot  resist  his  liabil- 
ity on  such  note  or  bill  in  an  action  by  the  present  holder; 
even  though  such  holder  cannot  in  his  own  person  prove 
a  bona  fide  ownershi[),  because  he  was  not  a  holder 
for  value,  or  he  took  the  paper  with  notice  or  after 
maturity;  or  because  some  other  element  of  the  negotiable 
character  is  wanting  in  his  own  person.^  The  only  excep- 
tion to  this  general  rule  is  to  be  found  in  the  person  of  a 
prior  indorsee  or  holder,  who  cannot,  in  his  own  person, 
claim  to  be  a   bona  fide    holder.      Such   prior    indorsee  or 

1  Langford  v.  Varner,  05  Mo.  App.  370;  Joiks  v.  Wieseii  (Nob.  '97), 
69  N.  W.  7G2. 

247 


§    94  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

transferee  cannot,  by  a  transfer  of  such  bill  or  note  to  one 
who  can  fill  all  the  requirements  of  bona  fide  ownership, 
and  by  a  transfer  to  himself,  acquire  the  protection  of  6o7ta 
fide  ownership  in  the  character  of '  a  later  indorsee  or 
transferee.^ 

Before  considering  in  detail  who  is  a  bona  fide  holder,  it 
is  necessary  to  determine  — 

§  94.  What  defense  will  and  will  not  prevail  against 
bona  fide  holders  —  General  Statement. —  It  is  custom- 
ary to  say  that  the  bona  fide  holder  takes  the  negotiable 
paper  free  from  all  equitable  df'fienses ;  meaning  thereby 
those  defenses  whieli  do  not  appear  on  the  face  of  the 
paper ^  and  which  do  not  absolutely  negative  the  exist- 
ence of  the  paper  as  a  monetary  obligation.  For  example, 
the  bona  fide  holder  can  enforce  a  negotiable  bill  or 
note,  although  it  was  originally  negotiated  with- 
out consideration,^  or  where  it  was  based  upon  an 
illegal  consideration,  except  where  the  consideration  is 
made  illegal  by  statute,  and  the  statute  expressly  declares 
all  contracts,  based  upon  such  consideration,  to  be  abso- 
lutely void.^  The  bona  fide  holder  can  enforce  the  bill  or 
note,  although  it  had  its  inception  in  fraud,*  or  where  the 
bill  or  note  was  paid,^  or  any  party  to  the  paper  released^ 
before  maturity  and  without  cancellation  or  surrender  of 

1  Fuller  w.  Goodnow,  62  Minn.  163;  64  N.  W.  161;  Hatch  v.  Johnson 
Loan  &  Trust  Co.  79  Fed.  828 ;  Braxton  v.  Braxton,  20  D.  C.  355;  Weems 
V.  Shaughnessy,  70  Ilun,  175.     Sgg  post,  §  107. 

2  See  ante,  §  51. 

3  See  ante  §  51. 

4  Goodman  v.  Siraonds,  20  How.  34.";  Brown  v.  Spofforo,  94  U.  8.  474; 
Second  Nat.  Bank  v.  Hewitt  (N.  J.  '96),  34  A.  988;  Hyman  v.  Am.  Electr. 
Forge  Co.,  18  Misc.  Rep.  381  (41  N.  Y.  S.  655);  Central  Bank  v.  Ham- 
mett,  50  N.  Y.  158;  Grant  v.  Walsh,  145  N.  Y.  102  (40  N.  E.  209) ;  Cristy 
V.  Campau  (Mich.  '96),  65  N.  W.  12;  Wayne  Agricultural  Co.  v.  Cardell, 
73  Ind.  555;  Highsmith  v.  Martin,  99  Ga.  92  (24  S.  E.  865);  Taylor  v. 
Cribb  (Ga.  '97),  26  S.  E.  4G8;  Sturges  v.  Miller,  80  111.  241;  Second  Nat. 
Bank  v.  Morgan,  165  Pa.  St.  199  (30  A.  957) ;  Lanier  v.  Union  Mtge.  &c. 
Tr.  Co.  (Ark.  '97),  40  S.  W.  466. 

s  Small  V.  Clarke,  51  Cal.  227. 

6  Palmer  v.  Marshall,  60  111.  269;  Schoen  v.  Houghton,  50  CaL  528. 
248 


CH.  IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  §    04 

the  paper.  Tliese  defenses  do  not  appear  on  the  face  of 
the  paper,  and  yet  do  not  negative  the  existence  of,  at 
least  ii  prima  facie ^  legal  obligation. 

On  the  other  hand,  where  the  defense  shows  that  there 
never  was  a  binding  ol)ligation  on  the  maker  of  the  note, 
or  on  the  drawer  or  acceptor  of  a  bill ;  —  in  other  words, 
that  some  one  of  the  essentials  of  a  valid  contract  is  want- 
ing, so  that  for  that  reason  what  purports  to  be  a  bill  or 
note  is  not  one, —  tlie  defense  will  prevail  against  a  bona 
fide  holder,  as  well  as  the  original  payee. 

It  has  already  been  ex[)lained  that  where  a  bill  or  note  is 
based  upon  a  consideration,  which  is  declared  illegal  by 
statute,  and  the  statute  declares  all  such  contracts  to  be 
absolutely  void,  such  an  instrument  cannot  be  sued  on  by  a 
bona  fide  holder. ^  Competency  of  the  parties  is  essential 
to  the  validity  of  a  bill  or  note,  it  matters  not  into  whose 
hands  it  may  come.  Hence,  if  the  maker  or  other  primary 
obligor  of  a  negotiable  instrument  is  incapacitated  by 
infancy,  insanity,  or  coverture,  the  paper  is  void  or  voida- 
ble even  in  the  hands  of  a  bona  fide  holder. ^  Where  the 
obligor  is  a  private  corporation,  and  the  bill  or  note  is 
issued  ul(7-a  vires;  whether  such  [)a[)er  is  good  in  the  hands 
of  a  bona  fide  holder,  seems  to  depend  upon  the  possession 
by  such  corporation  of  the  general  power  to  issue  bills  and 
notes.  If  it  has  this  general  power,  the  particular  bill  or 
note  can  be  enforced  against  it  by  a  bona  fide  holder,  even 
though  it  was  given  in  settlement  of  an  ultra  vires  transac- 
tion. But  if  the  corporation  is  denied  all  power  to  bind 
itself  by  the  issue  of  a  negotial)le  instrument,  it  will,  of 
course,  be  void  even  in  the  hands  of  a  bona  fide  holder.-^ 

If  an  instrument  be  a  forgery,  it  is  manifest  that  a  bona 
fide  holder  can  acquire  no  rights  against  those  parties  as  to 
whom  it  is  a  forgery.*  But  the  transferrer  or  indorser  of  a 
forged  bill  or  note  will  of  course  be  liable  to  the  bona  fide 

'  See  ante,  §  51. 

2  See  ante,  §§  33-3G. 

3  See  ante,  §  43. 

*  See  post,  chapter  on  Forgery  and  Alterations. 

249 


§   95  RIGHTS    OF    BOXA    FIDE    HOLDERS.  [CH.  TX. 

holder,    as    has    been     explaiued    in    the    two    proceding 
chapters.^ 

§  95.   Instruments  void  for  want  of  delivery. —  Delivery 

is  the  act  which  gives  life  to  the  negotiable  instrument,  and 
until  it  has  been  delivered,  no  cause  of  action  arises  thereon, 
as  between  the  immediate  parties  to  the  paper. ^  But  the  au- 
thorities are  not  agreed  as  to  the  circumstances  under  which, 
if  at  all,  a  bona  Jide  holder  can  recover  on  a  bill  a  note, 
which  has  not  been  delivered  to  a  payee  or  third  person  for 
any  purpose.  It  is  agreed  that  where  the  paper  is  delivered 
in  escrow,  the  hoia  fide  holder,  who  gets  possession,  before 
the  condition  of  the  escrow  has  been  performed,  gets  a 
good  title  to  the  paper. -^  But  where  there  has  been  no 
delivery  of  the  paper  for  any  purpose,  and  it  has  been 
taken  away  from  him  without  his  consent,  and  trans 
ferred  to  a  bona  Jide  holder ;  some  of  the  cases  main- 
tain that  the  maker  or  drawer  is  not  lial)le  thereon,  whether 
the  paper  was  complete  or  incomplete,  unless  it  can  be 
shown  that  his  culpable  negligence  enabled  another  to  get 
possession  of  the  undelivered  instrument.*  But  it  has  been 
held  to  be  culpable  negligence  for  one  to  sign  an  otherwise 
complete  negotiable  bill  or  note,  and  to  lay  it  away  in  some 
box  or  drawer,  although  under  lock  and  key;  and  if  it  be 
stolen  under  such  circumstances,  or  it  is  taken  away  from 
the  obligor  by  force,  and  it  i)asses  into  the  hand  of  a  bona 
fide  holder,  such  holder  can  recover  on  the  paper. ^  '  But 
where  the  instrument  is  incomplete  when  it  is  stolen,  the 
authorities  seem  to  be  agreed,  that  a  bona  fide   holder  can- 

1  See  ante,  §§  76,  84. 

2  See  ante,  §  26. 

3  See  ante,  §  27. 

^  Eastmau  v.    Shaw,  65  N.  Y.  522;  Burson  v.  Huntington,  21  Mich. 
415  (4  Am.  Rep.  497). 

5  Worcester  Co.  Bank  v.  Dorchester  &c.  Bank,  10  Cush.  488  (57  Am. 
Dec.  120);  Salander  v.  Lockwood,  06  Ind.  285;  Clarke  v.  Johnson,  54  Ill» 
296  (in  this  case,  the  note  was  snatched  from  the  maker's  hands,  before 
he  had  added  an  intended  condition);  Klnyon  v.  Wohlford,  17  Minn. 
239  (10  Am.  Rep.  165). 
250 


CH.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  §   96 

not  get  title  by  indorsement  or  transfer  from  the  thief  after 
its  completion  by  the  hitter.* 

The  same  principles  control,  where  the  owner  of  a  ne- 
gotiable  bill  or  note  intrusts  it  to  the  possession  of 
another  and  he  fraudulently  negotiates  it  to  a  bona  Jide 
holder.     The  latter  acquires  a  good  title  to  the  paper. -^ 

It  must,  however,  be  borne  in  mind  that  where  a  paper 
is  payable  to  order,  no  one  can  be  a  bona  Jide  holder, 
unless  the  paper  has  been  indorsed  by  the  one  to  whose 
order  it  is  payable,  either  to  the  holder  or  in  blank.  The 
possibility  of  transfer  of  a  stolen  bill  or  note  to  a  bona 
fide  holder  can  arise  only  when  it  is  payable  to  bearer, 
indorsed  in  blank,  or  when  the  payee  or  indorsee  is  the 
thief. 

§  96.  Blank  instruments  delivered  to  agent  and  filled 
up  in  violation  of  iUvStructions.  —  If  one  should  cxt  cute 
a  bill  or  note  in  blank,  and  deliver  the  same  to  an  ao-ent 
without  instructions  to  fill  the  blanks  in  accordance  with 
the  directions  given  ;  and  this  agent,  in  violation  of  these 
instructions,  should  vary  the  terms  and  conditions  of  the 
intended  paper,  or  he  should  divert  it  from  the  intended 
purpose;  the  paper  would  be  a  binding  obligation  in  the 
hands  of  a  bona  fide  holder,  and  the  maker  or  drawer  can- 
not defend  a  suit  on  the  altered  or  diverted  note  or  bill, 
on  the  general  ground,  that  having  reposed  confidence  in 
the  agent,  he  should  bear  the  loss  occasioned  by  the  agent's 
breach  of  confidence  or  violation  of  instructions,  rather 
than  that  such  loss  be  thi own  upon  a  bona  fide  holder. 
As  a  general  rule,  the  paper  as  com[)leted  by  the  agent 
will  be  binding  upon  the  maker  or  d'awer,  as  against  a 
bona  fide    holder.^     But  in  every  case  in  which  the  bona 

>  Ledwich  v.  Mcltim,  53  N.  Y.  307;  Redlick  v.  Doll,  54  N.  Y.  234  (13 
Am.  Rep.  573);  Bazendale  v.  Bennett,  L.  R.  3  Q.  B.  527.  But  see  Clarke 
V.  Johnson,  54  111.  296. 

2  Ilalsted  V.  Colvin,  51  N.  J.  Eq.  387  (26  A.  928). 

■''  Michigan  Bank  v.  Eldrcd,  9  Wall.  544,  National  Exchange  Bank  v. 
White,  30  Fed.  412;  Bank  of  Pittsburg  v.  Neal,  22  How.  96;  Market  & 

251 


§   96  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.  IX. 

fide  holder  is  held  to  be  entitled  to  recover  on  an  instru- 
ment which  htis  been  filled  up  by  an  agent  in  violation  of 
instructions,  it  will  be  found  that  the  unauthorized  additions 
or  insertions  conform  in  character  with  the  object  and  pur- 
pose of  the  blank  instrument.  If  the  additional  clause  or 
sti[)ulation  is  not  customarily  inserted  in  a  bill  or  note,  the 
holder  is  charged  with  notice  of  its  unusual  character,  and 
he  is  put  to  his  inquiry  to  ascertain  whether  the  agent  is 
authorized  to  insert  the  unusual  provision,  whenever  he 
knows  that  the  paper  has  been  completed  by  an  agent. ^ 
And  in  all  cases,  the  holder  must  show  that  he  took  the 
paper,  which  had  been  wrongfully  completed  by  the  agent, 
in  good  faith,  for  value  and  without  notice  of  the  violation 
of  instructions  by  such  agent.  It  has  been  held  that  where 
the  holder  knows  that  the  instrument  has  been  signed  in 
blank,  and  its  completion  has  been  intrusted  to  an  agent, 
he  is  charged  with  the  duty  of  inquiring  into  the  limitations 
of  the  agent's  authority. ^  But  the  better  opinion  seems  to 
be  that  he  is  permitted  to  presume  that  the  agent  has  not 
exceeded  his  authority,  as  long  as  the  paper  does  not  contain 
any  unusual  or  inconsistent  provisions.^ 

Fulton  N.  Bk.  v.  Sargent,  83  Me.  349  (27  A.  192);  Chase  Nat.  Bank  v. 
Faurot,  149  N.  Y.  532  (44  N.  E.  164;;  Am.  Exch.  Nat.  Bank  v.  N.  Y. 
Belting  &c.  Co.,  148  N.  Y.  698  (43  N.  E.  163;  Androscoggin  Bank  v.  Kim- 
ball, 10  Cush.  373;  Humphrey  v.  Finch,  97  N.  C.  303  (1  G.  E.  870); 
Geddes  v.  Blackmore,  132  Ind.  651  (32  N.  E,  567) ;  Snyder  v.  Van  Doren, 
46  Wis.  602  (32  Am.  Rep.  739);  Weston  v.  Myers,  33  111.  424;  Hender- 
son V.  Bondurant,  39  Mo.  369  (93  Am.  Dec.  281) ;  Joseph  v.  National 
Bank,  17  Kan.  256;  Tabor  v.  Merchants'  Nat.  Bank,  48  Ark,  454  (3  S. 
W.  805) ;  Shryver  v.  Hawkes,  22  Ohio  St.  308. 

1  Angle  V.  N.  W.  Mut.  Ins.  Co.,  92  U.  S.  331;  McGrath  v.  Clark,  56  N. 
Y.  34  (15  Am.  Rep.  372);  McCoy  v.  Lockwood,  71  Ind.  319;  Ivory  v. 
Michael,  33  Mo.  398. 

2  VanDuzerv.  Howe,  21  N.  Y.  531;  Hatch  v.  Searles,  2  Sm.  &  Giff. 
147;  First  Nat.  Bank  v.  Compo.  Board  Mfg.  Co.,  61  Minn.  274;  63  N.  W. 
731;  National  Bank  of  St.  Joseph  v.  Dakin,  64  Kan.  656  (39  P.  180); 
Bank  of  Topeka  v.  Nelson  (Kan.  '97),  49  P.  155,  where  the  bill  was  nego- 
tiated without  additional  signatures. 

3  See  Angle  v.  N.  W.  Ins.  Co  ,  92  U.  S.  331 ;  Snyder  u.  Van  Doren,  46 
Wis.  602  (32  Am.  Rep.  739);  McCoy  v.  Lockwood,  71  Ind.  319.  As  to 
the  effect  of  an  alteration  of  a  completed  instrument,  as  against  a  bona 
fide  holder,  see  postf  chapter  on  Forgeries  and  Alterations. 

252 


CH.  IX.]  RIGHTS   OF   BONA    IIDE    HOLDERS.  §   98 

§  97.  Bill  or  note  written   over  a  blank   signature. — 

But  a  diritinction  should  be  recognized  between  signing  a 
blank  form  of  a  bill  or  note,  and  intrusting  the  same  to  a 
stranger,  whether  it  is  given  with  instructions  to  fill,  or 
without  such  instructions,  on  the  one  hand  ;  and 
on  the  other  hand,  writing  one's  name  on  a  blank 
piece  of  paper,  over  which  a  third  person,  having 
obtained  possession  of  it  for  some  other  purpose,  writes 
out  a  promissory  note  or  bill  of  exchange.  As  has  been 
seen,  in  the  former  case,  the  bona  fide  holder  has  the  right 
to  presume  that  the  agent,  to  whom  the  blank  bill  or  note 
has  been  delivered,  had  the  authority  to  fill  it  up  and  nego- 
tiate it;  and  that  he  filled  it  up  and  negotiated  it  in  accord- 
dance  with  his  instructions.  But  where  one  has  merely 
written  his  name  on  a  blank  piece  of  paper  —  it  matters 
not  for  what  purpose,  if  it  be  not  for  the  purpose  of  sign- 
ing some  kind  of  contract  —  and  some  one,  to  whom  the 
paper  with  the  signature  has  been  given,  writes  out  over 
the  signature  a  promissory  note  or  bill  of  exchange,  there 
is  neither  an  implied  authority  to  bind  the  party  so  writing 
his  name  by  such  a  bill  or  note,  nor  negligence  in  intrusting 
the  signature  to  a  third  ])erson,  upon  which  can  rest  the 
claim  that  such  a  person  is  liable  to  a  ho)ia  fide  holder  as 
maker,  drawer,  or  acceptor  of  such  a  note  or  bill.  In  such 
cases,  the  bona  fide  holder  cannot  recover.^ 

§  98.  Bills  or  notes  executed  by  mistake  or  under  false 
representations. —  Mistake  and  false  representations  are 
equitable  defenses,  which  do  not  negative  the  existence  of 
a  prima  facie  legal  contract;  and  hence,  one  would  natur- 
ally suppose  that  these  would  not  be  good  defenses  in  an 
action  on  a  note  or  bill  brought  against  a  maker  or  a  drawer 
by  a  bona  fide  holder;  and,  undoubtedly,  this  general  i)rop- 

1  First  Nat.  Bank  v.  Zeims,  93  Iowa,  140  (01  N.  W.  483);  Clioe  v. 
Guthrie,  42  Ind.  227  (13  Am.  Rep.  357);  Nauce  v.  Lary,  5  Ala.  370  (in 
this  case,  one  signed  his  name  to  a  blank  paper,  with  instruction  to 
write  over  it  a  bond;  held  not  liable  on  note  written  instead);  Walker 
».  Eberly,  29  Wis.  194. 

253 


§   98  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

ositioii  is  well  settled. ^  It  does  h;ippen,  sometimes,  ibal 
ignorant  or  careless  persons  are  induced  to  sign  a  contiact, 
under  a  false  representation  as  to  its  character,  which  is  in 
fact  a  bill  or  note.  The  general  drift  of  authority  makes  in 
this  connection  a  distinclion  i)etvveen  persons  who  can  read 
the  [)aper  and  those  who  cannot.  Where  one  is  generally 
illiterate,  or  he  is  unable  to  read  the  language  in  which  the 
contract  is  written,  {)roof  that  he  signed  the  contract  under 
the  false  re[)resentati()n  that  iC  was  something  else  than  a 
bill  or  note,  will  avoid  such  bill  or  note  so  signed  even  in  the 
hands  of  a  bona  Jide  holder. ^  But  where  one  is  able  to 
read  for  himself,  he  is  guilty  of  negligence  if  he  permits 
the  paper  to  be  read  to  him,  or  is  satisfied  with  an  oral 
explanation  of  its  contents  and  characte'r.  If  he  has  been 
misled  or  deceived,  under  such  circumstances,  he  must 
suffer  the  loss,  and  he  cannot  defend  himself  against  the 
claims  of  a  bona  fide  holder.^ 

In  some  of  the  Western  States,  however,  it  has  been  held 
that  false  representations  of  the  character  of  the  instru- 
ment signed  will  be  a  good  defense  to  an  action  on  the  same 
by  a  bona  fide  holder,  if  there  appears  to  have  been  no 
negligence,  short  of  confidence  in  the  representations  of 
the  payee  ;  and  in  Illinois,  such  false  representations  are 
declared  by  statute  to  be  a  good  defense  to  an  action  on  a 
bill  or  note,  even  against  a  bona  fide  holder.* 

1  See  ante,  §  94. 

2  Putnam  v.  Sullivan,  4  Mass.  45  (3  Am.  Dec.  206)  ;  Chapman  v.  Rose, 
56  N.  Y.  137  (15  Am.  Rep.  401) ;  Schuylkill  Co.  v.  Copley,  67  Pa.  St.  386 
(5  Am.  Rep.  441);  Van  Brunt  v.  Slngley,  85  111.  281;  Fayette  Co.  Sav. 
Bank  v.  Steffes,  54  Iowa,  214  (6  N.  W.  267);  Kalamazoo  Nat.  Bank  v. 
Clark,  523  Mo.  App.  59  (o'd  and  feeble). 

3  Chapman  v.  Rose,  56  (15  Am.  Rep.  401);  Ruddell  v.  Dillman,  73  Ind. 
518  (37  Am.  Rep.  152)  Bank  v.  Johns,  22  W.  Va.  520;  Brooks  v.  Matthews, 
78  Ga.  739  (3  S.  E.  627);  Ross  v.  Doland,  29  Ohio  St.  473;  Hopkins  ??. 
llawKCye  Ins.  Co.,  57  Iowa,  203  (10  N.  W.  605)  ;  Carpenter  v.  First  Nat. 
Bank,  119  111.  352  (ION.  E.  18);  Shirts  v.  Overjohn,  60  Mo.  305. 

*  Hubbard  r.  Rankin,  71  111.  129;  Auten  v.  Gruner,  90  III.  300;  Gibbs 
V.  Linabury,  22  Mich.  479  (7  Am.  Rep.  675);  Butler  v.  Karns,  39  Wis. 
61 ;  Palmer  v.  Sargent,  5  Neb.  223;  Green  v.  Wilkie  (Iowa,  '96),  66  N.  W. 
1046. 

254 


CH.  IX.]  RIGHTS    OF   BONA    FIDE    HOLDERS.  §    100 

§  99.  Bills  and  notes  executed  under  duress. —  It  is 
doubtful  wlu'tlier  a  bona  fide  holder  can  recover  on  a  bill 
or  note,  whose  execution  has  been  procured  by  duress;  and 
the  authorities  are  not  afrrced.  Some  of  the  cases,  hold- 
ing to  the  principle,  that  a  contract  executed  under 
duress  is  voidable  only,  maintain  that  duress  is  not  a 
good  defense  against  a  bona  fide  holder.^  Other  cases, 
on  the  principle  that  where  there  is  duress  there  has 
been  no  exercise  of  will  power  and  hence  no  intentional 
delivery  of  the  bill  or  note,  have  held  ihwi  {ha  bona  fide 
holder  cannot  maintain  action  on  such  a  bill  or  note.^ 

As  a  general  rule,  only  those  persons  who  have  signed 
a  contract  under  duress  may  set  up  the  defense  of  duress. 
But  it  has  been  held  that  where  a  surety  or  joint  obligor 
takes  the  pa[)er  without  notice  of  the  duress,  he  may 
defend  any  suit  biougiit  against  him  on  the  paper,  at  least 
as  against  the  immediate  parties.-^  And  the  same  rule  has 
been  followed  in  the  case  of  an  accommodation  indorser.^ 

§  100.  Estoppel  as  affecting  defenses  against  bona  fide 
holders. —  If  the  purchaser  of  a  bill  or  note  should,  for 
the  purpose  of  allaying  his  suspicious  as  to  the  validity  of 
the  paper,  make  inquiries  of  any  party  or  parties  to  the  in- 
strument before  completing  the  purchase  ;  and  these  parties 
should  give  him  assurances  that  the  bill  or  note  was  valid, 
those  who  gave  him  such  assurances  would  be  estoi^ped  from 
setting  up  defenses  in  any  action  brought  against  them  on  the 
instrument;  at  least  in  any  case  where  they  either  knew  or 
should  have  known  at  the  time  of  the  existence  of  such  a  de- 
fense, but  not  where  the  defense  was  discovered  afterwards.^ 

1  Clarke  v.  Pease,  41  Vt.  414;  Griffith  v.  Sifgreaves,  90  Pa.  St.  IGl; 
Hogan  V.  Moore,  48  Ga.  15G;  Duncan  v.  Scott,  1  Camp.  100;  Farnaers  &c. 
Bank  v.  Butler,  48  Mich.  102;  Peckhara  v.  Ilendren,  7G  Ind.  46. 

2  Loomis  V.  Ruck,  oG  N.  Y.  4G2;  1  Daniel  Negot.  Inst.,  §§  857,  858. 

■''  Hazard  v.  Griswold,  21  Fed.  178;  Harris  v.  Carmody,  131  Mass.  51 
(41  Am.  Rep.  188);  Coffelt  v.  Wise,  G2  Ind.  451;  Osborn  v.  Robbins,  36 
N.  Y.  3G5. 

^  Griffith  V.  Sltgreaves,  90  Pa.  St.  IGl. 

■'  Tobey  r.  Chipman,  13  Allen,  123;  Lynch  c.  Kennedy,  3t  N.  Y.  151; 
Fleischinan  v.  Stern,  90  N.  Y.  110;    Woodruff  r.  Munroe,  33  Ind.  14G; 

255 


§    101  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

There  is  a  difference  of  opinion,  however,  whether  snch  an 
assurance  would  work  an  estoppel,  where  it  is  made  in 
the  form  of  a  certificate,  attached  to  the  instrument  by 
the  primary  obligors  at  its  inception.  It  has  been  held  that 
such  a  certificate  would  work  an  estoppel  ^  and,  also,  that 
it  would  not. 2 

Of  course,  the  ordinary  principles  of  estoppel  apply  in 
this  case  ;  so  that,  in  order  that  the  bona  fide  holder  may 
be  protected  tliereby,  he  must  show  that  the  representation 
was  made  before  the  purchase,  and  that  he  relied  upon  it, 
in  making  the  purchase  ;  ^and,  in  an  action  on  the  estoppel, 
the  holder  can  only  recover  the  consideration  he  paid,  'plus 
interest,  and  not  the  face  value  of  the  instrument.* 

§  101.  Wbat  is  meant  by  bona  fide. —  It  has  been  very 
frequently  stated  that,  in  order  that  the  holder  of  a  bill 
or  note  may  claim  the  right  to  protection  from  the  defenses 
which  do  not  appear  on  the  face  of  the  instrument,  he  must 
show  that  he  took  the  paper  in  good  faith.  Mala  fides  would 
deprive  him  of  this  protection.  He  must  hei\.honafide 
holder.  Two  constructions  have  been  ph\ced  upon  this 
requirement  of  good  failh.  One  rule  is  that  to  be  a  boyia 
fide  holder,  the  indorser  or  transferee  must  have  used  due 
diligence  in  inquiring  into  any  suspicious  circumstances 
which  may  have  surrounded  the  instrument  or  its  negotia- 
tion, of  which  he  became  cognizant  at  the  time.  And  if 
such  an  inquiry  would  have  led  to  the  discovery  of  the  de- 
fense,   he    cannot    claim  to  be  a  bona  fide  holder.^     But 

Reedy  v.  Brunner,  60  Ga.  107 ;  Hefner  v.  Dawson,  63  111.  403  (14  Am.  Rep. 
123);  Workman  v.  Wright,  30  Ohio  St.  405  (31  Am.  Rep.  546)  ;  Rose  v. 
Hurley,  39  Ind.  77;  Menaugh  v.  Chandler,  89  Ind.  94. 

1  Insurance  Co.  v.  Bruce,  95  U.  S.  328;  Bank  of  Rome  v.  Rome,  19  N. 
Y.  20  (75  Am.  Dec.  272);  Clark  v.  Sisson,  22  N.  Y.  312. 

2  Jaqua  v.  Montgomery,  33  Ind.  36  (5  Am.  Rep.  168). 

3  Crossan  v.  May,  68  Ind.  242;  Sackett  v.  Kellar,  22  Ohio  St.  554; 
Moore  v.  Robinson,  62  Ala.  537;  Watson  v.  Hoag,  40  Iowa,  143. 

4  Campbell  v.  Nichols,  33  N.  J.  L.  81. 

5  Sanford  u.  Norton,  17  Vt.  285;  Merritt  v.  Duncan,  7  Heisk.  156  (19 
Am.  Rep.  612);  Marsh  v.  Small,  3  La.  Ann.  402  (48  Am.  Dec.  452); 
Adkins  v.  Blake,  2  J.  J.  Marsh.  40. 

256 


CH.  IX.]  RIGHTS    OF   BONA    FIDE    HOLDERS.  §    103 

the  great  weight  of  authority  in  this  country,  as  well 
as  reason,  supports  the  contrary  doctrine,  that  the  bona  fide 
character  of  a  holder  can  be  destroyed  only  by  proof  of 
participation  in  or  actual  knowledge  of  the  fraudulent  or 
illegal  character  of  the  instrument.^ 

§  102.   Bona  fide  holder  must  be  a  holder  for  value. — 

One  cannot  in  his  own  character  claim  to  be  a  bona  fide 
holder  of  a  bill  or  note,  unless  he  can  show  that  he  has 
paid  a  valuable  consideration  for  its  transfer  to  him.  The 
courts  do  not  always  express  the  requirement  in  the  same 
way,  but  they  are  agreed  that  the  consideration  must  be 
substantial.  It  must  have  a  substantial  value,  although 
not  necessarily  adequate.  But  a  consideration  may  be 
substantial  and  even  adequate,  although  it  be  less  than  the 
face  value  of  the  bill  or  note,  if  it  approximately  repre- 
sents its  market  value. 

Several  legal  questions  may,  however,  arise,  where  the 
consideration  paid  is  less  than  the  face  value.  They  are 
the  subjects  of  the  three  succeeding  sections."^ 

§  103.  When  inadequacy  of  price  constructive  notice 
of  fraud. —  If  I  he  price  paid  for  the  transfer  of  a  bill  or 
note  be  grossly  inadequate,  i.  e.,  it  is  far  below  its  real 
market  value;  it  is  undoubtedly  true  that  the  purchaser  is 
thereby  charged  with  constructive  notice  of  the  fraudulent 
or  defective  title  of  the  vendor,  or  of  the  existence  of  some 

1  Bank  of  Pittsburg  v.  Neal,  22  How.  9G;  Swift  v.  Smith,  102  U.  S.  446; 
Wing  V.  Ford,  89  Me.  140  (35  A.  1023);  Smilli  v.  Livingston,  111  Mass. 
342;  Stimson  v.  Whitney,  130  Mass.  591 ;  Chapman  v.  Rose,  5G  N.  Y.  137 
(15  Am.  Rep.  401);  Seybel  v.  Nat.  Currency  Banlt,  54  N.  Y.  288  (13  Am. 
Rep.  583) ;  Craft's  Appeal,  42  Conn.  146;  Hamilton  v.  Vought,  34  N.  J.  L. 
187;  Second  Nat.  Bank  v.  Morgan,  1G5  Pa.  St.  199  (30  A.  957) ;  Lancaster 
Nat.  Bank  v.  Garbcr,  178  Pa.  St.  91  (35  A.  848);  Walker  v.  Kee,  14  S.  C. 
142;  Murray  v.  Beckwith,  81  111.  43;  Pond  v.  Waterloo  Agr.  Works,  50 
Iowa,  590;  Ilowzy  v.  Eppinger,  34  Mich.  29;  Central  Nat.  Bank  v.  Pipkin, 
66  Mo.  App.  592;  Hamilton  v.  Marks,  63  Mo.  167;  Kelley  v.  Whitney,  45 
Wis.  110  (30  Am.  Rep.  697) ;  Johnson  v.  Way,  27  Ohio  St.  374;  Brothers 
V.  Bank  of  Kankana.  84  Wis.  381  (54  N.  W.  786). 

2  As  to  the  sufficiency  of  consideration  in  general,  to  make  one  a  bona 
fide  holder,  see  generally  ante,  chapter  V. 

17  257 


§   104  RIGHTS    OF   BONA   FIDE    HOLDERS.  [CH.  IX. 

defense  to  the  liability  thereon  of  the  primary  obligors  and 
prior  indorsers.^ 

But  every  price,  which  is  less  than  the  face  value  of  the 
bill  or  note,  is  not  necessarily  inadequate  or  unsubstantial. 
Only  that  price  is  inadequate  which  falls  below  the  market 
value.  One-half  the  face  value  may,  under  some  circum- 
stances, be  a  grossly  inadequate  price  ;  while  under  altered 
circumstances  it  may  be  greatly  in  excess  of  the  real  mar- 
ket value  of  the  paper.  Each  case  must  therefore  stand  on 
its  own  merits;  and  where  it  can  be  shown  that  the  price 
paid  approximates  reasonably  the  market  value  of  the 
paper,  there  is  no  constructive  notice  of  fraud  or  other 
equitable  defenses,  which  would  take  from  the  purchaser 
the  protection  due  to  a  bona  fide  holder."^ 

§  104.  Inadequacy  of  price  for  indorsement  as  effected 
by  laws  against  visury. —  In  many  of  the  States,  statutes 
are  to  be  found  which  declare  the  exaction  of  more  than  a 
certain  rate  of  interest  for  loans  of  money  to  be  usurious 
and  illegal,  and  impose  various  penalties  for  infrac- 
tions of  the  statute;  and  in  a  few  cases,  the  instru- 
ment which  is  based  on  an  usurious  contract  is  declared 
to  be  absolutely  void,  even  as  against  bona  fide  holders. 
Where  the  charge  of  usury  is  brought  against  the 
original  parties  to  the  bill  or  note,  there  can  be  no  question 
of  the  validity  of  the  charge,  where  it  is  shown  that  an 
usurious  rate  of  interest  has  been  exacted,  whether  it  takes 
the  form  of  interest  to  accrue  in  the  future,  or  it  is  paid  by 
way  of  discount  from  the  face  of  the  p:iper.  But  the  dif- 
ficult   question    to  be    determined  in    this    connection    is, 

1  Gould  V.  Stevens,  43  Vt.  125  (5  Am.  Rep.  265) ;  Tod  v.  Wick,  36 
Ohio  St.  370;  Auteo  v.  Gruaer,  90  111.  300;  First  Nat.  Bank  v.  Wade, 
Iowa  (G3  N.  W.  345);  Chouteau  v.  Allen,  70  Mo.  290;  Dewitt  v.  Per- 
kins, 22  Wis.  451;  United  States  Nat.  Bank  v.  McNair,  116  N.  C.  550 
(21  S.  E.  389);  Coliger  v.  Francis,  2  Baxter,  42 ;  Hereth  v.  Merchants' 
Nat.  Bank,  34  Ind.  380. 

2  Phelan  v.  Moss,  67  Pa.  St.  59  (5  Am.  Rep.  402);  State  Bank  v.  Mc- 
Coy, 69  Pa.  St.  204  (8  Am.  Rep.  246);  Bailey  v.  Smith,  14  Ohio  St.  396 
(84  Am.  Dec.  385)  ;  Cannon  v.  Canfleld,  11  Neb.  506  (9  N.  W.  693);  Irby 
V-  Blaiu,  31  Kau.  716  (3  P.  499). 

2.38 


CH.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  §    104 

whether  the  transfer  of  a  bill  or  note  by  a  payee  or 
indorsee,  for  a  sura  less  than  the  face  value  of  the  paper,  is 
usurious,  where  the  difference  in  amount  between  the  face 
value  and  the  price  paid  is  more  than  the  hiwful  rate  of 
discount. 

Where  an  indorsee  takes  the  bill  or  note  on  the  indorse- 
ment of  the  payee,  when  he  knows  that  the  payee  is  an 
accommodation  indorser,  the  transaction  will  be  usurious, 
it  the  discount  from  the  face  value  is  greater  than  the  law- 
ful maximum  rate  of  interest.^  But  whore  the  payee  is 
himself  a  holder  for  value,  or  where  the  indorsee  does  not 
know  that  he  is  an  accommodation  indorser,  the  transfer 
constitutes  a  sale  of  an  existing  obligation;  and  whether  in 
such  a  case  the  law  against  usury  applies  is  answered  dif- 
ferently by  the  different  courts.  A  few  cases  have  held 
that  even  in  such  a  case,  the  transaction  is  usurious,  so  that 
the  indorsee's  claim  against  all  parties  to  the  instrument  is 
subject  to  the  defense  of  usury,  where  the  price  paid  by 
such  indorsee  constitutes  a  greater  discount  from  the  face 
value  than  what  is  allowed  by  the  usury  law.^ 

A  greater  number  of  cases  have  held  that  while  the 
indorsement  is  iu  such  a  case  usurious,  so  far  as  liability 
of  the  immediate  indorser  is  concerned,  it  does  not  affect 
the  indorsee's  title  to  the  bill  or  note,  or  his  claim  against 
the  primary  obligors  and  prior  indorsers.^ 

The  third  view,  which  is  more  consonant  with  the  de- 
mands of  the  commercial  world,  and  which  is  supported  by 
the  great  weight  of  authority,  is  that  the  indorsement  of 
an  existing,  complete  bill  or  note  is  in  every  respect  a  sale 
of  a  commodity,  and  not  "  a  loan  or  forbearance  of  money  " 

1  Veazie  Bank  v.  Paiilk,  40  Me.  109;  Lloyd  v.  Keach,  2  Conn.  175 
(7  Am.  Dec.  25(J);  Nat.  Bank  of  Auburn  v.  Lewis,  75  N-  Y.  510  (31  Am. 
Rep.  484);  Noble  v.  Walker,  32  Ala.  45G;  May  v.  Campbell,  7  Humph. 
450. 

2  Whitwortli  V.  Adams,  5  Rand.  41!). 

3  Kni2;ht  v.  Putnam,  3  Pick.  184;  Ballinger  v.  Edwards,  4  Ired.  Eq. 
449;  Armstrong  v.  Gibson,  31  Wis.  CI  (II  Am.  Kep.  699);  Newman  v. 
Williams,  29  Miss.  222.  See  Nichols  v.  Pearson,  7  Pet.  103;  Gaul  v. 
Willis,  20  Pa.  St.  259. 

259 


§   105  RIGHTS    OF   BONA    FIDE    HOLDERS.  [cH.  IX. 

which  comes  within  the  provisions  of  the  hiw  iigtilust  usury  ; 
that  this  law  does  not  in  such  a  case  affect  either  the  lia- 
bility of  the  primary  obligor  and  prior  indorsers,  or  of  the 
immediate  indorser,  to  the  indorsee.  These  cases  hold, 
that  where  an  indorsement  is  made  at  a  discount  from  the 
face  value  of  the  bill  or  note,  which  would  be  usurious,  if 
made  in  the  original  loan  of  the  money  on  such  bill  or 
note,  the  transaction  will  not  be  considered  usurious,  and 
hence  illegal,  in  any  respect  whatever  ;  and  that  such  in- 
dorsee has  his  remedy  on  the  bill  or  note,  not  only  against 
the  maker,  drawer,  acceptor  and  prior  indorsers,  but  also 
against  the  immediate  indorser.^ 

§  105.  Inadequacy  of  price,  as  affecting  amount  which 
may  be    recovered  of  primary    obligor  and    indorser. — 

Another  occasion  for  contrariety  of  opinion  is  the  determi- 
nation of  the  amount  that  the  holder  of  a  bill  or  note  can 
recover  of  the  drawer  and  acceptor  or  maker  and  prior 
indorsers  on  the  one  hand,  and  of  the  immediate  indorser 
on  the  other,  where  he  pays  less  than  the  face  value  for 
such  bill  or  note. 

There  is  probably  no  contradiction  of  authority  on  the 
proposition  that  the  holder  can  recover  the  full  face  value 
of  the  primary  obligors  and  prior  indorsers,  where  the 
transaction  is  not  tainted  with  fraud,  or  other  equitable 
defense.  But  where  there  is  a  defense  to  the  action  on  the 
paper,  which  is  available  against  the  prior  indorsee  or 
payee,  some  of  the  cases  hold  that  the  holder  can  re- 
cover only  the  consideration  he  paid  plus  interest ;  as 
the  object  of  the  doctrine  of  bona  fide  ownership  is  only 
to  indemnify  the  bona  fide  holder  against  loss,  on  account 
of   the   non-liability  of   the   prior   parties   to   the  bill    or 

1  Nichols  V.  Pearson,  7  Pet.  103;  Fowler  v.  Strickland,  107  Mass.  552; 
City  Banls  v.  Perkins,  29  N.  Y.  554  (86  Am.  Rep.  332)  ;  Brown  u,  Penfield> 
36  N.  Y.  473;  Lloyd  v.  Reach,  2  Conn.  175  (7  Am.  Dec.  256);  Import- 
ers &c.  Nat.  Bank  v.  Littel,  46  N.  J.  L.  233;  Gaul  v.  Willis,  26  Pa.  St.  259; 
Roark  v.  Turner,  29  Ga.  455;  National  Bank  v.  Green,  33  Iowa,  140  > 
Nobler.  Walker,  32  Ala.  450;  Bunzel  u.  Maas  (Ala.  '97),  22  So.  568;  Lee 
V.  Pile,  37  Ind.  107. 

260 


CH.   IX.]  RIGHTS    OF    BONA    FIDE    IIOLDEKS.  §    106 

note.^  Other  decisions,  on  the  other  hand,  maintain  that  in 
every  case,  where  suit  can  be  maintained  at  all,  the  bona 
fide  holder  can  recover  the  full  face  value  of  the  primary 
obligors  and  prior  indorsers.^  Other  cases,  again,  main- 
tain that  only  the  consideration  actually  paid  can  be 
recovered  of  the  drawee,  acceptor  or  maker,  where  the  one 
sued  has  signed  the  paper  for  accommodation,  and  the 
holder  knew  that  fact  when  ho  took  the  paper. ^ 

The  same  contradiction  of  authority  exists  in  determining 
how  much,  in  case  of  inadequacy  of  price,  can  be  recov- 
ered of  the  immediate  indorser  ;  some  of  the  authorities 
maintaining  that  the  full  face  value  can  be  recovered,* 
while  other  cases  maintain  that  only  the  consideration  paid 
can  be  recovered  of  such  immediate  indorser.^ 

§  106.  Usual  course  of  business. —  No  one  can  claim  to 
be  a  bona  fide  holder,  so  as  to  secure  in  his  own  person  the 
protection  against  the  so-called  equitable  defenses,  unless 
he  has  acquired  title  to  the  bill  or  note,  in  what  is  called 
"  the  usual  course  of  business."     This  means  that  he  must 


1  Stoddard  v.  Kimball,  6  Cush.  469;  Clark  v.  Sisson,  22  N.  Y.  312; 
Gordon  v.  Boppe,  55  N.  Y.  605;  Ilolcomb  v.  Wyckoff,  35  N.  J.  L.  35  (10 
Am.  Rep.  219)  ;  Oppenheimer  v.  Farmers'  &c.  Bank,  97  Tenn.  19  (36  S. 
W,  705);  Exchange  Bank  v.  Biitner,  00  Ga.  654;  Bailey  v.  Smith,  14  Ohio 
St.  396  (84  Am.  Dec.  385);  Grant  v.  Kidwell,  30  Mo.  455;  Buchanan  u. 
International  Bank,  78  111.  500;  Curtis  v.  Mohr,  18  Wis.  645;  Petri  v, 
Fonddu  Lac  N.  B.,  84  Tex.  212  (20  S.  W.  777). 

2  Cromwell  v.  County  of  Sac,  96  U.  S.  51;  Kailroad  Companies  u. 
Schutte,  103  U.  S.  118;  Wade  v.  Chicago  &c.  R.  R.  Co.,  149  U.  S.  327; 
Lay  u.  Wissman,  30  Iowa,  305;  Schoen  v.  Houghton,  50  Cal.  528;  U.  S. 
Nat.  Bank  v.  McNair,  116  N.  C.  550  (21  S.  E.  389);  Bissell  v.  Dickerson, 
64  Conn.  61  (29  A.  473). 

3  Dresser  v.  Mo.  &c.  Ry.  Co.,  93  U.  S.  92;  Hubbard  v.  Chapin,  2  Allen, 
328;  Lay  v.  Wissman,  36  Iowa,  305.  See  Daniels  v.  Wilson,  21  Minn. 
530,  where  this  rule  is  held  to  apply  only  where  the  cause  of  action  is 
subject  lo  some  defense  not  appearing  on  the  face  of  the  paper. 

<  Durant  v.  Banta,  26  N.  J.  L.  624;  Lloyd  v.  Keach,  2  Conn.  175  (7 
Am.  Dec.  25G) ;  Moore  v.  Baird,  30  Pa.  St.  139;  Roach  v.  Turner,  29  Ga. 
455;  National  Bank  v.  Green,  33  Iowa,  140. 

^  Munn  V.  Commission  Co.,  15  Johns.  44^(8  Am.  Dec.  219);  Cage  v. 
Palmer,  16  Cal.  158;  Noble  v.  Walker,  32  Ala.  456. 

261 


§    lOfi  EIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.  IX. 

have  acquired  the  paper  in  the  course  of  a  common  and 
customary  negotiation  of  it.  The  character  of  the  consid- 
eration does  not  affect  the  question;  and  it  has  been  held 
that  the  transfer  of  a  bill  or  note  in  payment  of  a  pre-ex- 
istinsf  debt  has  nevertheless  been  made  in  the  usual  course 
of  business.^  It  is  the  character  of  the  transfer  which 
determines  the  question,  whether  it  has  been  made  "  in  the 
usual  course  of  the  business." 

If  the  paper  is  payable  to  order,  any  transfer  except  by 
indorsement  by  the  payee  or  last  indorser  will  not  be  in 
"the  usual  course  of  business,"  and  the  transferee  takes 
the  bill  or  note  subject  to  equitable  defenses. ^  And 
whether  the  paper  be  payable  to  order  or  to  bearer,  invol- 
untary transfers,  as  to  assignees  in  bankruptcy  or  receivers, 
or  even  to  assignees  for  the  benefit  of  creditors,  are  not 
held  to  be  made  in  the  usual  course  of  business;  and 
such  transferees  take  negotiable  paper  subject  to  whatever 
defenses  may  be  available  against  their  assignors.^ 

Whether  a  negotiation  of  a  bill  by  an  acceptor  is  a  usual 
course  of  business,  so  as  to  enable  the  transferee  to  claim 
the  protection  of  a  boria  fide  holder,  has  been  decided  in 
the  affirmative*  and  in  the  negative.^ 

1  Swift  V.  Tyson,  16  Pet.  1;  Schepp  v.  Carpenter,  51  N.  Y.  602; 
Hotchkiss  V.  Fitzgerald  &c.  Plaster  Co.,  41  W.  Va.  375;  23  S.  E.  576; 
McPherson  v.  Bondreau,  48  La.  Ann.  431  (19  So.  550);  Robinson  v.  Lair, 
31  Iowa,  9.  See  Burnham  v.  Merchants'  Exch.  Bank,  92  Wis.  277  (66  N. 
W.  510). 

2  Lancaster  Nat.  Bank  v.  Taylor,  100  Mass.  18  (97  Am.  Dec.  70;  1  Am. 
Rep.  71 ) ;  Mills  v.  Porter,  4  Hun,  524 ;  Gibson  v.  Miller,  29  Mich.  355  (18 
Am.  Rep.  98);  Sturges  v.  Miller,  80  111.  241;  Losee  v.  Bissell,  76  Pa.  St. 
459.     See  ante,  §  78,  83. 

3  Billings  V.  Collins,  44  Me.  271;  Roberts  v.  Hall,  37  Conn.  205  (9 
Am.  Rep.  308) ;  Litchfield  Bank  v.  Peck,  29  Conn.  384;  Stephens  v.  Olson, 
C2  Minn.  295;  64  N.  "W.  898  (transfer  to  new  partnership).  But  see 
Earhart  v.  Gant,  32  Iowa,  481,  where  a  contrary  ruling  was  made  under 
ihe  statute.  And  see  also  Irby  v.  Blain,  31  Kan.  710  (3  P.  499);  Jones  v. 
AViesen  (Neb.  '97),  69  N.  W.  762,  where  such  purchaser  is  held  to  have 
all  the  rights  of  an  indorsee  without  recourse. 

*  Morley  V.  Culverwell,  7  M.  &W.  174;  Witte  v.  Williams,  8  S.  C.  290 
(28  Am.  Rep.  294). 

'"  Central  Bank  v.  Hammett,  50  N.  Y.  158. 
262 


CH.    IX.]  RIGHTS    OF    BOXA    FIDP:    HOLDERS.  §    107 

§  107.  Transfer  before  aud  after  maturity. —  The 
universal  rule  of  the  law  of  commercial  paper  is  that  a 
bill  or  note  ceases  to  be  negotiahle  when  it  becomes  clue, 
and  can  afterwards  \)Q,u\i\y  a^iKigned,  i.  e.,  transferred  with- 
out giving  to  the  transferee  any  better  title  than  what  his 
assignor  or  transferrer  had.  The  fact  that  the  paper  is 
overdue  is  sufficient  to  throw  upon  the  transferee  the  duty 
of  inquiring  why  it  was  not  paid  at  maturity.^  But  the 
indorsee  after  maturity  takes  the  paper  subject  only  to 
those  equities  which  arose  between  the  original  parties, 
and  between  himself  and  the  primary  obligor  or  his  imme- 
diate indorser.  He  does  not  t  ike  the  paper  with  notice 
of  equities  which  arose  between  intermediate  indorsers  and 
indorsees.'-^ 

Where  one  sisrns  a  bill  or  note  for  accommodation, 
whether  as  primary  obligor  or  indorser,  it  has  been  held 
that  he  is  bound  to  an  overdue  indorsee,  whether  he  knows 
of  the  character  of  his  obligation  or  not;  unless  he  signs 
with  the  agreement  or  understanding  that  the  paper  is  to 
be  negotiated  before  maturity  or  within  a  stipulated  time, 
and  the  overdue  indorsee  knows  that  he  has  signed  for 
accommodation.  In  the  latter  case,  such  overdue  indorsee 
takes  the  paper,  with  constructive  notice  of  the  defense 
which   such  accommodation  obligor  has,  and  cannot   hold 

1  Texas  v.  Hardenberg,  10  Wall.  (i3;  Ferree  v.  N.  Y.  Security  &c.  Co., 
74  Fed.  709;  Hinckley  v.  Union  Pac.  R.  R.  Co.,  129  Mass.  52  (37  Am.  Rep. 
297)  ;  Simpson  v.  Hall,  47  Conn.  417;  City  Bank  of  Dowagiac  v.  Dill,  102 
Mich.  305  (60  N.  W.  707);  Marsh  v.  Marshall,  5.S  Pa.  St.  390;  Quimby 
V.  Sfod  lard  (N.  H.),  35  A.  1106;  Leach  v.  Funk  (Iowa,  '90),  GC 
N.  W.  7G8;  Charke  v.  Dederick,  31  Md.  148;  Davis  v.  Noli,  38  W.  Va. 
66  (17  N.  E.  791);  K  Hogs?  v.  Schnaake,  56  Mo.  130;  Lee  v.  Turner,  89 
Mo.  489  (14  S.  W.  505);  Kittle  v.  Dolamater,  3  Neb.  325;  Scolt  r.  First 
Nat.  Bank,  71  Ind.  445:  Kernohan  v.  Durham,  48  Ohio  St.  1  (26  N.  E- 
982);  Greenwell  v.  Haydon,  78  Ky.  333  (r,9  Am.  Re;).  2:U);  Walker  r. 
Wilson,  79  Tex.  185  (14  S.  W.  7'.l8;  15  S.  W.  402);  Stafford  v.  Fargo,  35 
III.  481;  Nunes  v.  Russell,  65  111.  App.  171;  Risley  r.  Gray,  98  Cal.  40 
(32  P.  884) ;  Vance  i'.  First  Nat.  Bank,  49  La.  Ann.  378   (21  So.  860). 

2  Hill  V.  Shields,  81  N.  C.  250  (31  Am.  Rep.  499);  Warren  r.  Halght, 
65  N.  Y.  171;  Crosby  v.  Tanner,  40  Iowa,  130;  Elheridge  v.  Gallagher,  55 
Miss.  458;  Wyraan  »-.  Robbins,  51  Ohio  St.  98  (37  N.  E.  264). 

263 


§    107  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

him  liable.^  But  in  New  York  and  other  States,  it  has 
been  held  that  in  every  case  of  accommodation,  there  is  an 
implied  agreement  that  the  paper  is  to  be  negotiatiBd  before 
maturity,  and  that,  therefore,  the  accommodation  party  is 
not  liable  on  the  paper  to  an  immediate  overdue  indorsee. ^ 
The  overdue  indorsee  is  also  not  subject  to  any  equity 
arising  against  his  indorser  after  the  transfer,  or  to  any 
set-off  arising  out  of  collateral  or  independent  claims.^ 

But  in  all  these  cases,  it  must  be  remembered  that  while 
the  overdue  indorsee  does  not  get  any  better  title  than  what 
his  indorser  had  ;  he  does  get  whatever  title  or  right  he 
had.  Hence,  if  the  transfer  after  maturity  was  made  by 
one,  who  before  maturity  had  acquired  title  as  a  bona  fide 
holder,  the  overdue  transferee  could  recover  of  the 
parties  to  the  paper  on  the  strength  of  the  bona  fide 
character  of  his  transferrer's  title.  This  is  not  only  the 
rule  in  the  case  of  transfer  of  overdue  paper,  but, 
also,  where  the  transferee  takes  the  paper  before  the 
maturity  with  notice  from  one  who  is  a  bona  fide  holder.* 
But  this  rule  is  subject  to  this  exception,  that  if  the  paper 
were  open  to  defense  in  the  hands  of  the  payee  or  of  some 

1  Dunn  V.  Weston,  71  Me.  270  (36  Am.  Rep.  310)  ;  Parr  v.  Jewell,  16  C. 
B.  684;  Caruthers  v.  West,  11  Q  B.  U4;  Seyfert  u.  Edison,  44  N.J.  L.  393. 

2  Chester  v.  Dorr,  41  N.  Y.  279;  Hoffman  v.  Foster,  43  Pa.  St.  137; 
Peale  v.  Addicks,  174  Pa.  St.  549  (34  A.  203);  Battle  v.  Weems,  44  Ala. 
105;"Simons  v.  Morris,  53  Micti.  155. 

3  Baxter  v.  Little,  6  Met.  7  (39  Am.  Dec.  707) ;  Barker  v.  Valentine,  10 
Gray,  341;  Simpson  v.  Hall,  47  Conn.  417;  Elliott  v.  Deason,  64  Ga.  63; 
Eversole  v.  Maull,  50  Md.  96;  Wliittaker  v.  Kuhn,  52  Iowa,  315  (3  N.  W- 
127);  Arnot  V.  Woodbiirn,  35  Mo.  99;  Davis  v.  Miller,  14  Gratt.  1.  But 
see  contra,  Driggs  v.  Rockwell,  11  Wend.  504;  Davis  v.  Neligh,  7  Neb.  78; 
Downing  v.  Gibson,  53  Iowa,  517  (5  N.  W.  699)  (statute  controlling). 

•*  Hoffman  v.  Bank  of  Milwaukee,  12  Wall.  181;  Commissioners  of 
Madison  Co.  v.  C'a-k,  94  U.  S.  278;  Roberts  v.  Lane,  64  Me.  108  (18  Am. 
Rep.  242);  Bissell  v.  Gowdy,  31  Conn.  47;  Wilson  v.  Mechanics  Sav. 
Bank,  45  Pa.  St.  488;  Hogan  v.  Moore,  48  Ga.  156;  Bassett  v.  Avery,  15 
Ohio  St,  299;  Scott  v.  First  Nat.  Bank,  71  Ind.  445;  Barker  v.  Lichten- 
berger,  41  Neb.  751  (60  N.  W.  79);  Bradley  v.  Marshall,  54  111.  173;  Rob- 
inson V.  Smith,  62  Minn.  62  (64  N.  W.  90) ;  Simon  v.  Merritt,  33  Iowa, 
537;  Kinney  v.  Kruse,  28  Wis.  183;  Donnerberg  v.  Oppenheimer,  15 
Wash.  290  (46  P.  254). 

264 


CH.   IX.]  RIGHTS    OF    BONA    FIDK    HOLDERS.  §    108 

prior  indorsee,  he  could  not,  by  securing  a  retransfer  to 
himself  of  the  bill  or  note  by  a  subsequent  bona  fide  in- 
dorsee or  holder,  claim  the  benefit  of  the  superior  title  of 
such  subsequent  bona  fide  holder.^ 

§  108.  Paper  payable  on  deiuand  or  at  sight,  when 
overdue. — Where  a  bill  or  note  is  made  payable  on 
demand,  or  at  sight,  it  becomes  payal>le  immediately  on 
demand  by  the  holder,  except  that,  in  some  of  the  States, 
an  instrument  payable  at  sight  carries  the  days  of  grace .^ 
This  is  true,  not  only  when  the  bill  or  note  is  payable  *'  on 
demand  "or  "  at  sight ;"  but  also  where  some  other  equiv- 
alent phrase  is  employed  to  denote  the  time  of  payment, 
as  "in  such  portions  and  at  such  times  as  the  directors 
may  direct."  "^ 

At  one  time  it  was  held  that  a  bill  or  note,  particularly  a 
note  which  was  payable  on  demand,  was  never  overdue,  so 
as  to  let  in  equitable  defenses,  as  long  as  there  has  been  no 
demand  for  payment.^  But  it  now  seems  to  be  definitely 
settled,  at  least  in  this  country,  that  such  a  paper  is  over- 
due, if  it  remains  unpaid  for  an  unreasonable  time  after  its 
date  or  the  day  of  deliveiy ;  and  if  it  is  transferred  after 
the  lapse  of  what  is  considered  by  the  courts  to  be  a  rea- 
sonable time  for  payment,  the  transferee  cannot  claim  the 
superior  title  of  ix  bona  fide  holder.  On  the  other  hand, 
if  the  bill  or  note  is  transferred  within  a  reasonable  time 
after  its  negotiation,  the  transferee  is  not  charged  with 
constructive  notice  of  the  prior  dem.ind  and  dishonor.^ 

1  Hatch  V.  Johnson  Loan  &  Trust  Co.,  79  Fed.  828;  Sawyer  v.  Allen,  9 
Allen,  42;  Tod  v.  Wick.  3G  Ohio  St.  370;  Kost  u.  Bender,  25  Mich.  515; 
Fuller  V.  Goodnow,  (J2  Minn.  103  ((J4  N.  W.  161). 

2  Hirst  V.  Brooks,  .lO  Barb.  534;  Darling  t7.  Wooster,  9  Ohio  St.  517 
And  part  payment  would,  of  course,  be  taken  as  evidence  of  a  domami, 
and  of  a  consequent  maturity  of  the  paper,  as  to  the  balance  which 
remained  unpaid.     Bayliss  v.  Pearson,  15  Iowa,  279. 

^  Howland  v.  Edmonds,  24  N.  Y.  307.  See  to  the  same  effect.  Bow- 
man V.  McChesney,  22  Gratt.  609. 

*  Brooks  V.  Mitcliell,  9  M.  &  W.  15;  Lea  v.  Glover,  1  Bradw.  335; 
Gordon  v.  Preston,  Wright  (Ohio),  341. 

^  Thrall  v.  Mead,  40  Vt.  540;  Works  v.  Hershey,  35  Iowa,  340;  Poor- 

265 


§    108  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

In  determining  what  is  to  be  considered  as  a  reasonable 
time,  after  the  lapse  of  which  a  bill  or  note  is  to  be  treated 
as  overdue,  no  general  rule  or  principle  can  be  formulated, 
which  will  clearly  point  to  the  answer.  The  mere  length 
of  time  is  no  guide.  In  every  case,  the  conclusion  dei)ends 
upon  its  peculiar  circumstances.  If  it  is  ascertained  from 
the  circumstances  of  the  particular  case  under  inquiry, 
that  the  parties  had  intended  the  instrument  to  be  a  con- 
tinuing obligation,  and  had  not  anticipated  an  immediate 
payment  of  the  bill  or  note,  a  greater  length  of  time  would 
be  considered  reasonable,  than  where  the  circumstances 
disclose  the  expectation  of  an  early  payment.  In  the  case 
of  bills,  the  continuous  circulation  of  the  paper,  by  trans- 
fer from  one  party  to  another,  and  from  place  to  place,  is 
a  controllino;  circumstance  ;  and  in  the  case  of  bills  and 
notes,  the  most  common  measure  of  the  reasonableness  of 
the  time  is  the  presence  or  absence  in  the  instrument  of  the 
reservation  of  interest.  The  reservation  of  interest  is  taken 
to  be  signal  proof  of  the  intention  of  the  parties  to  make 
the  instrument  a  continuing  obligation;  and  the  actual  de- 
termination of  what  is  a  reasonable  time  varies  with  the 
lengths  of  the  periods  of  payment  of  interest.^ 

man  v.  Mills,  29  Cal.  118  (95  Am.  Dec.  90);  Bacon's  Adm'r  v.  Bacon's 
Trustee  (Va.  '97),  27  S.  E.  576. 

1  In  the  following  cases,  the  instrument  was  held  to  be  overdue,  when 
transferred:  Camp  v.  Clark,  14  Vt.  387  (two  months) ;  Losee  v.  Dunkin, 
7  Johns.  70;  5  Am.  Dec.  245  (two  mouths  and  a  half) ;  Herrick  v.  Wool- 
verton,  41  N.  Y.  581;  1  Am.  Rep.  4G1  (three  months)  ;  La  Due  v.  First 
Nat.  Bank,  31  Minn.  33;  16  N.  W.  420  (five  months)  ;  Morey  v.  Wakefield, 
41  Vt.  24;  98  Am.  Dec.  562  (ten  months) ;  Turner  v.  Iron  Chief  Min.  Co., 
74  Wis.  355;  43  N.  W.  149  (ten  months);  Cross  v.  Brown,  51  N.  II.  486 
(13  months);  Crim  v.  Starkweather,  88  N.  Y.  339;  42  Am.  Rep.  250  (3^ 
years)  ;  Gregg  v.  Union  &c.  Nat.  Bank,  87  Ind.  238  (six  years)  ;  Leonard 
V.  Olson  (Iowa,  '97),  68  N.  W.  677  (ten  years).  In  the  following  cases, 
bills  and  notes  were  held  to  be  still  negotiable,  and  therefore  not  yet  over- 
due: Howe  V.  Hartness,  11  Ohio  St.  449;  78  Am.  Dec.  312  (two  days); 
Mitchell  V.  Catchlngs,  23  Fed.  Rep.  710  (23  days);  Sice  v.  Cunningham, 
1  Cow.  397  (five  months) ;  Castle  v,  Candee,  16  Conn.  224  (nine  months) ; 
Ranger  v.  Gary,  1  Met.  309  (two  year.>)  ;  Jameson  v.  Jameson,  72  Mo.  G40 
(six  years,  where  note  was  payable  at  any  time  during  maker's  lifetime 
and  demand  was  made  one  year  after  maker's  death). 
266 


CH.   IX.]  RIGHTS    OF    J50XA    FIDE    HOLDERS.  §    109 

In  some  of  the  States,  the  time  when  such  paper 
"becomes  overdue  is  now  regulated  by  statute,  notably  in 
Massachusetts,  Connecticut,  California,  and  others.  But 
the  bill  or  note  still  remains  payable  on  demand,  so  that, 
notwithstanding  tbe  statute,  it  matures  as  between  the 
original  parties  whenever  payment  is  demanded.^ 

Where  this  question  is  not  regulated  by  statute,  a  note 
payable  on  demand,  without  reservation  of  interest,  is  held 
to  be  due  immediately,  for  the  purposes  of  the  Statute  of 
Limitations;  so  that  the  statute  will  run  from  the  date  of 
the  note;  but  where  interest  is  reserved,  it  will  run  from 
the  expiration  of  what  is  considered  to  be  a  reasonable 
time  for  the  maturing  of  the  note.^ 

§  109.  Transfer  after  default  in  the  payment  of  install- 
ment of  principal  or  interest.  — If  a  bill  or  note  is  made 
payable  in  installments  at  succeeding  dates,  default  in  the 
payment  of  one  installniont  of  the  principal  sum  will  con- 
stitute such  a  dishonor  of  the  entire  bill  or  note  as  to  make 
a  subsequent  transferee  take  the  paper  subject  to  all  the 
equities,  whether  the  entire  sum  becomes  payable  on 
default  in  one  installment  or  not.^ 

But  the  authorities  are  not  agreed  as  to  the  effect  of  a 
default  in  the  payment  of  an  installment  of  interest.  All 
are  agreed  that  if  the  note  stipulates  that  the  whole  prin- 
cipal sum  shall  become  due  and  payable,  if  the  installment 
of  interest  is  not  paid,  any  subsequent  transferee  would 
not  be  a  bona  fide  holder.  But,  although  it  has  been  held 
that  the  failure  to  pay  an  installment  of  interest  would 
destroy   the   negotiability  of   the  note,  whether  it  contains 

'  Seymour  v.  Continental  Life  Ins.  Co.,  44  Conn.  300  (26  Am.  Rep. 
469). 

2  Tiirall  V.  Mead,  40  Vt.  540;  Lavellete  v.  Wendt,  75  N.  Y.  579;  Siiutts 
V.  Fingar,  100  N.  Y.  5.39  (3  N.  E.  588);  Presbrey  y.  Williams,  15  Ma-s. 
193.  For  special  applications  of  the  principle,  see  Jameson  v.  Jameson, 
72  Mo.  640;  Kilbreath  v.  Gaylord,  34  Ohio  St.  305, 

3  Vinton  v.  Kinf:,  4  Allen,  562;  Field  v.  Tibbetts,  57  Me.  358  (99  Am. 
Dec.  770) .  See,  as  to  stipulation  that  all  of  a  series  of  notes  shall  become 
due  on  default  in  payment  of  one.  National  Bk.  of  Battle  Creek  v.  Dean, 
86  Iowa,  656  (53  N.W.  838). 

267 


§    111  RIGHTS    OF    BONA   FIDE    HOLDERS.  [CH.   IX. 

the  stipulation  for  acceleration  of  payment  or  not,^  the 
better  opinion  is  that,  where  there  is  no  such  stipulation, 
default  in  the  payment  of  the  interest  does  not  take  away 
the  negotiability  of  the  note,  and  the  subsequent  trans- 
feree can  claim  the  protection  of  a  bona  Jide  hoWer ;  at 
least,  where  the  holder  takes  the  paper  without  notice  of 
the  default.^ 

§  110.  Transfer  on  last  day  of  grace,  or  day  of  matur- 
ity,—  before  the  close  of  the  hours  of  business,  is  said  by 
some  of  the  authorities  to  be  a  transfer  before  maturity  ;^ 
but  there  is  authority  for  holding  that  the  paper  is  over- 
due at  that  time,  and  the  transferee  on  the  day  of  pay- 
ment takes  the  paper  subject  to  the  equities.* 

§  111.  Actual  and  constructive  notice  of  defenses. — 

One  of  the  requirements  of  bona  Jide  ownership  is  that  the 
holder  must  be  a  purchaser  without  notice  of  defenses  to 
the  bill  or  note.  But  in  order  that  notice  may  affect  the 
purchaser's  title  as  a  bona  fide  holder,  he  must  receive  the 
notice  before  he  has  completed  the  transfer  of  the  paper  to 
him  by  the  payment  of  the  consideration;  and  if  he  has 
paid  only  a  purt  of  the  consideration,  when  he  received 
notice,  he  is  a  bona  fide  holder  ^>'0  fanto,  for  the  amount 
which  he  has  already  paid.^  If  an  agent  of  the  purchaser 
receives  notice,   while   he  is   representing  his  principal  in 

1  Newell  V.  Greg?,  51  B  irb.  263.  And  see  First  N  it.  Bank  v.  Scott  Co., 
14  Minn.  77;  First  Nat.  Bank  v.  Forsytli  (Minn.  '97),  69  N.  W.  909. 

2  Kelley  v.  Whitney,  45  Wis.  110  (30  Am.  Rep.  697);  Cromwell  t?. 
County  of  Sac,  96  U.  S.  51;  F;rst  Nit.  BIj.  v.  Forsyth  (Minn.  '97),  69 
N.  W.  909.  But  see  Nat.  Bauk  of  N.  A.  v.  Kirby,  108  Mass.  497;  Chou- 
teau V.  Allen,  70  Mo.  290. 

3  Crosby  v.  Grant,  3G  N.  II.  273;  Savings  Bank  v.  Bates,  8  Conn.  505; 
Holton  V.  Hubbard,  49  La.  Ann.  715  (22  So.  338). 

■«  Pineu.  Smith,  11  Gray,  38.  But  see  Shawmut  Nat.  Bank  v.  Manson 
(Mass.  '97),  47  N.  E.  196,  wh^re  bank,  which  had  credited  payees  with 
amount  of  check  and  permitted  them  to  draw  against  it,  before  receiving 
report  from  the  clearing  house,  was  held  to  be  a  bona  fide  holder. 

s  Dresser  v.  Mo.  &c.  Ry.  Co.,  93  U.  S.  92 ;  Weaver  v   B  irden,  49  N.  Y. 
291;  Perkins  v.  White,  36  Ohio  St.  330;  Harrington  v.  BuUe  &  B.  Min. 
Co.  (Mont.  '97),  48  P.  758. 
268 


GH.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  §111 

that  particular  transaction,  the  principal  is  charged  with  such 
notice,  but  the  notice  is  not  imputed  to  the  principal,  if  the 
agent  receives  it,  when  he  is  engaged  with  his  own  affairs.^ 
But  wliere  one  is  a  member  of  two  tirras,  knowled<re  of 
defenses  to  a  bill  or  note,  which  such  partner  acquires  as  a 
member  of  the  first  firm,  will  be  imputed  to  the  second 
firm,  where  the  latter  becomes  a  holder  of  such  bill  or  note, 
through  the  instrumentality  of  this  common  partner. ^ 

All  through  the  law,  a  distinction  is  made  between  actual 
and  constructive  notice.  Actual  notice,  at  least  in  the  pres- 
ent connection,  may  be  defined  as  the  synonym  of  actual 
knowledge  of  an  existing  defense  to  the  bill  or  note  in 
question.  Whenever  a  purchaser  has  actual  notice  of  such 
a  defense,  there  can  be  no  doubt  that  he  cannot  claim  to  be 
a  bona  fide  holder.  The  difficulty  is  experienced  in  deter- 
mining his  bona  fide  ownership,  when  he  has  received  no 
actual  notice,  but  he  has  become  possessed  of  information 
which  arouses,  or  is  calculated  to  arouse,  in  the  mind  of  a 
reasonably  prudent  man  some  suspicion  that  the  bill  or 
note  is  subject  to  some  ol)jection  to  its  validity.  Some  of 
the  Ciises  hold  that  the  purchaser's  claim  to  bona 
fide  ownership  is  destroyed  whenever  a  well-grounded 
suspicion  as  to  the  validity  of  the  bill  or  note  finds 
lodgment  in  his  mind,  and  he  fails  to  dissipate  such 
suspicion  by  reasonable  inquiry  in  the  proper  quarters."* 
But  the  better  rule  seems  to  be  that  his  information,  which 
arouses  his  suspicions,  must  amount  to  actual  notice  of  the 
probable    existence    of   a  defense  to  the  bill  or  note,  al- 

1  First  Nat.  Bank  v.  Babbidge,  160  Mass.  5G3  (36  N.  E.  462) ;  Smith  v. 
Ayer,  101  U.  S.320;  Gates  v.  National  Bank,  100  U.  S.  239;  Casco  N.  B.  v. 
Clark,  139  N.  Y.  307  (34  N.  E.  908);  Higi^ius  v.  Rldgway,  90  Hun,  398; 
Baker  v.  Guarantee  T.  &  S.  D.  Co.  (N.  J.  Eq.)  31  A.  174;  Tihien  r. 
Baruaril,  43  Mieh.  376  (38  Am.  Rep.  197);  Nat.  Bank  of  Bedford  v. 
Stever,  169  Pa.  St.  574  (32  A.  603);  Hardy  v.  First  Nat.  Bank,  56  Kan. 
493;  Kuott  v.  Tidymaii,  86  Wis.  164  (56  N.  W.  632);  Benton  v.  Germ.- 
Am.  N.  B.,  122  Mo.  332  (26  S.  W.  975). 

2  International  Trust  Co.  u.  Wilson,  161  Mass.  80  (36  N.  E.  689); 
Cheever  v.  Pittsburg  &c.  Ry.  Co.,  72  Hun,  380. 

8  Angle  V.  N.  W.  &c.  Ins.  Co.,  92  U.  S.  330;  Rowland  v.  Fowler,  47 
Conn.  347. 

26» 


§    111  RIGHTS    OK    BONA    FIDE    HOLDERS.  [oH.   IX. 

though  he  need  not  have  any  information  of  the  character 
of  such  probable  defense.*  For  example,  if  a  bill  or  note 
is  payable  to  one  as  "trustee,"  and  indorsed  to  the  pur- 
chaser in  payment  of  the  individual  debt  of  the  payee,  the 
purchaser  is  charged  with  constructive  notice  of  the  mis- 
appropriation of  the  note.^ 

The  cases  are  not  uniform  in  determining  the  effect  of 
the  statement  in  the  bill  or  note  of  the  consideration  for 
the  same,  on  the  bona  fide  ownership  of  the  purchaser. 
There  are  cases,  which  maintain  that  in  such  a  case,  the 
purchaser  of  the  bill  or  note  is  charged  with  the  duty  of 
inquiring  into  the  performance  and  validity  of  the  con- 
sideration. And  it  would  seem  to  be  a  well-established 
sfeneral  rule  that  the  statement  of  an  illegal  consideration 
in  the  bill  or  note  would  prevent  the  purchaser  from 
claiming  the  protection  of  a  bona  fide  holder.^  But,  inde- 
pendently of  statute,  the  better  opinion  is  that  the 
purchaser  of  a  bill  or  note  is  not  required  to  see  that  the 

1  Horton  v.  Bayne,  52  Mo.  533;  Hamilton  v.  Vought,  33  N.  J.  L.  187; 
De  Long  v.  Schroeder,  45  III.  App.  236;  Scott  v.  Scott,  38  N.  Y.  S.  613; 
2  App.  Div.  240;  Merchants'  Nat.  Bank  v.  Tracy,  77  Hun,  443;  State 
Bank  v.  Wilkie,  35  Neb.  579  (53  N.  W,  1603)  ;  Atlas  Nat.  Bank  v.  Holm,  71 
Fed.  489;  19  C.  C.  A.  94;  Doe  v.  N.  W.  Coal  &  Transportation  Co.,  78 
Fed.  G2;  Jennings  v.  Todd,  118  Mo.  296  (24  S.  W.  148);  Merchants 
Nat.  Bank  v.  McNier,  51  Minn.  178  (53  N.  W.  178);  Skinner  77.  Raynor 
(Iowa),  64  N.  W.  601;  Thompson  v.  Sioux  Falls  N.  B.,  150  U.  S.  231; 
Clark  V.  Evans,  66  Fed.  263 ;  13  C.  C.  A.  433 ;  Second  Nat.  Bank  v.  Morgan, 
165  Pa.  St.  199  (30  A.  957).     See  ante,  §  101. 

2  Shaw  V.  Spencer,  100  Mass.  382  (97  Am.  Dec.  107;  1  Am.  Rep.  115) ; 
Railway  &c.  Pub.  Co.  v.  Lincoln  Nat.  Bk.,  82  Hun,  8;  Third  Nat.  Bank  v. 
Lange,  51  Md.  138  (34  Am.  Rep.  304);  Strong  v.  Straus,  40  Ohio  St.  87 
(guardian) ;  Johnson  v.  Suburban  Realty  Co.,  62  Mo.  App.  156  (actual 
knowledge) ;  Chemical  Nat.  Bank  v.  Wagner,  93  Ky.  525  (20  S.  W.  535)  ; 
Capital  Sav.  Bk.  and  Trust  Co.  v.  Swan  (Iowa,  '97),  69  N.  W.  1065.  But 
see  contra,  "Westmoreland  v.  Foster,  60  Ala.  448,  the  word  "  trustee  " 
being  held  to  be  only  a  descriptio  personae;  and  Buchanan  v.  Mechanics' 
Loan  &  Sav.  Inst.,  84  Md.  430  (35  A.  1099)  ;  N.  Y.  Nat.  Exch.  Bank  v. 
Crowell,  177  Pa.  St.  313  (35  A.  613);  Paulette  v.  Brown,  40  Mo.  52 
(curator)  ;  Fletcher  v.  Schaumberg,  41  Mo.  501  (sheriff)  ;  First  Nat.  Bank 
V.  Wallis,  150  N.  Y.  455  (44  N.  E.  1038);  Kaiser  v.  First  Nat.  Bank,  78 
Fed.  281;  24  C.  C.  A.  88. 

3  See  ante,  §§  51,  94,  as  to  illegal  consideration,  and  post,  §  113,  as  to 
burden  of  proof. 

270 


CH.   IX.]  RIGHTa    OF    BONA    l-IDK    HOLDERS.  §    111 

consideiiilioo  luis  been  fully  performed,  where  he  happens 
lo  know  the  conJiideration,  in  order  to  make  good  his  claim 
of  bona  fide  ownership.^ 

If  the  bill  or  note  has  bcon  issued  f(»r  the  accommodation 
of  one  of  the  payees  or  has  been  indorsed  by  someone  for 
accommodation  of  the  maker  or  drawer,  knowledge  of  the 
accommodation  character  of  the  paper,  or  of  the  indorse- 
ment, does  not  affect  the  bona  Jide  ownership  of  the  pur- 
chaser .^  Where,  however,  there  has  been  a  diversion  of 
the  accommodation  ])aper  from  its  intended  purpose  to  the 
manifest  injuiy  of  the  accommodation  party,  and  the  pur- 
chaser knows  of  such  unauthorized  diversion,  he  cannot 
claim  to  be  a  bona  fide  holder  against  such  accommodation 
party. "^  If,  however,  the  diversion  does  not  result  in  any 
material  injury  to  the  accommodation  party,  the  bona  fide 
ownership  of  the  purchaser  is  not  affected  by  such  diver- 
sion ;  as  wheie  it  was  intended  that  the  bill  or  note  was  to 
have  been  negotiated  at  one  bank,  and  it  was  discounted 
at  another,  or  where  the  payee  or  other  party  accommo- 

1  Patten  v.  Gleason,  100  IVIass.  439;  Thrall  v.  Horton,  44  Vt.  386; 
David  V.  McCready,  17  N.  Y.  230  (72  Am,  Dec.  461) ;  Mishler  v.  Reed,  76 
Pa.  St.  70;  Heist  v.  Hart,  73  Pa.  St.  28(!;  Adams  v.  Robiuson,  69  Ga.  627; 
Post  V.  Abbeville  &  W.  Ky.  Co.  (Ga.  '97),  25  S.  E.  505;  Kelley  v.  Whitney, 
45  Wis.  110  (.iO  Am.  Rep.  697);  Stevenson  v.  O'Neal,  71  111.  314;  Ehrler 
V.  Wurthcn,  47  111.  App.  550;  Biei^ler  v.  Merchants'  Loan  &  Tr.  Co.,  164 
111.  197  (45  N.  E.  512);  McCarty  v.  Louisville  Banking  Co.  (Ky.  '97),  37 
S.  W.  144.  In  some  of  the  States,  it  is  required  by  statute  that  notes 
given  for  the  purchase  of  patent  rights  shall  contain  a  statement  to  that 
effect.  The  object  of  the  statutes  is  to  charge  purchasers  with  notice  of 
defenses,  growing  out  of  the  failure  of  the  consideration.  See  Miller  v. 
Finley,  26  Mich.  249  (12  Am.  Rep.  306) ;  Haskell  v.  Jones,  86  Pa.  St.  173; 
Woolen  V.  Ulrich,  64  lud.  120. 

2  Grant  v.  Ellicott,  7  Wend.  227;  Stevens  v.  Monougahela  Bank,  88  Pa. 
St.  157  (32  Am.  Rep.  438)  ;  Thatcher  v.  West  River  Nat.  Bank,  19  Mich. 
196;  Christy  v.  Campau  (Mich.  '90),  65  N.  W.  12;  Jom  s  v.  Berryhil),  25 
Iowa,  289;  Tourtelol  v.  Reed,  62  Minn.  384;  64  N.  W.  928.  But-see  ant-', 
§54. 

3  Clark  V.  Thayer,  105  Mass.  216  (7  Am.  Rep.  511)  ;  Daggett  v.  Whit- 
ing,  35  Conn.  366;  Farmers'  &c.  Nat.  Bank  v.  Moxon,  45  N.  Y.  762; 
Nickerson  v.  Ruger,  76  N.  Y.  279;  Corastock  r.  Hier,  73  N.  Y.  269  (29 
Am.  Rep.  142);  Davenport  v.  Stone,  104  Mich.  521;  62  N.  W.  722;  Gray 
r.  Bank  of  Kentucky,  29  I'a.  St.  365. 

2^71 


§   113  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.  IX. 

dated  transfers  it  in  payment  of  an  existing  debt,  instead 
of  raising  money  for  the  purpose  of  paying  such  debts. ^ 
But  if  an  accommodation  note  is  given  for  the  purpose  of 
taking  np  an  old  note,  on  which  the  accommodation  party 
is  liable,  it  would  be  an  unwarrantable  diversion  to  dis- 
count it  at  the  bank  and  apply  the  money  thus  realized  to 
some  other  purpose.^  But  if  the  bank  or  indorsee  does 
not  know  of  this  diversion,  he  or  it  will  take  the  renewal 
as  a  bona  fide  holder.^ 

It  must  be  remembered  that  when  a  bona  fide  holder 
transfers  the  paper  to  another,  the  latter  can  claim  the 
protection  afforded  by  the  bona  -fide  ownership  of  his 
transferrer.^ 

§  112.  I^otice  by  lis  pendens. — The  bona  iide  holder  is 
not  charged  with  constructive  notice  of  a  pending  suit,^  or 
of  the  registration  of  some  lien  or  mortgage  for  a  bill  or 
note,^  where  in  either  case  the  record  shows  that  a  defense 
can  be  set  up  against  the  bill  or  note,  held  by  such  bona 
iide  holder.^ 

§  113.   Burden  of  proof  as  to  bona  fide  ownersbip. — 

It  is  important  to  ascertain  on  Avhom  the  l)urden  of  proof 
rests  to  prove  or  disprove  the  fact  of  bona  fide  ownership. 
The  burden  shifts  from  one  person  to  another,  according 
to  the  facts  of  each  case. 

1  Hay  V.  Jackele,  90  Hun,  114;  Schepp  v.  Carpenter,  51  N.  Y.  602; 
Quinn  v.  Hard,  43  Vt.  375  (5  Am.  Rep.  284);  Duun  v.  Weston,  71  Me. 
270  (36  Am.  Rep.  310) ;  Jackson  v.  First  Nat.  Bank,  41  N.  J.  L.  177, 

2  Moore  v.  Ryder,  65  N.  Y.  438;  Lintz  v.  Howard,  18  Hun,  424. 

3  First  Nat.  Bank  v.  Getz  (Iowa,  '96),  64  N.  W.  799;  Davenport  v. 
Stone,  104  Mich.  521;  62  N.  W.  722. 

4  For  cases,  see  ante,,  §  107. 

5  Warren  County  v.  Marcy,  97  U.  S.  96;  Myers  v.  Ilazzard,  50  Fed. 
155;  Leitch  v.  Wells,  48  N.  Y.  585;  Day  v.  Zimmerman,  68  Pa.  St.  72  (8 
Am.  Rep.  157);  Mims  u.  West,  38  Ga.  18  (95  Am.  Dec.  379);  Stone  v. 
Elliott,  11  Ohio  St.  252;  Maybcrry  v.  Morris,  62  Ala.  113;  Matheny  v. 
Hughes,  10  Heisk.  401 ;  Head  v.  Cole,  53  Ark.  523  (14  S.  W.  898). 

6  Minell  v.  Read,  26  Ala.  730;  Packwood  v.  Gridley,  39  HI.  388. 

^  The  effect  of  a  pending  girnishment  on  the  rights  of  a  bonajide 
holder  is  shown  elsewhere,  §  81. 
272 


CH.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  §    113 

It  is  a  well-established  and  general  rule  of  law,  that  the 
possession  of  a  bill  or  note  by  the  last  indorsee,  where  the 
paper  is  payable  to  order,  or  by  any  one,  where  the  paper 
is  payable  to  bearer,  or  has  been  indorsed  in  blank,  \^ prima 
facie  proof  of  bona  fide  ownership  ;  and  the  burden  of 
provin<^  the  contrary  is  thrown  upon  the  maker  or  other 
party  defendant  to  the  action.^  But  there  is  no  such  pre- 
sumption from  possession  where  the  paper  is  payable  to 
order,  and  is  either  unindorsed,  or  indorsed  in  full  to  some 
other  person,  unless  the  party  in  possession  of  the  bill  or 
note  is  the  personal  representative  of  the  deceased  indorsee 
or  payee. 2  And  there  is  no  presumption  of  bona  fide  own- 
ership, where  a  prior  indorsee  has  possession/^  In  these 
cases,  the  i)arty  having  possession  must  affirmatively  prove 
his  title. 

Where  the  paper  is  payable  to  order  and  has  been 
indorsed,  if  the  maker  or  other  party  defendant  proves 
want  or  failure  of  consideration,  the  burden  is  on  him  to 
prove  that  the  holder  did  not  pay  consideration  for  the 
paper,  and  hence  was  not  a  bona  fide  holder  for  value.* 
But  it  has  been  held,  although  ap[)arently  without  good 
reason  for  the  distinction,  that  the  burden  is  thrown  on  the 
holder  that  he  paid  value,  where  the  paper  is  payable  to 
bearer.'^ 

1  Brown  v.  Spofford,95  U.  S.  474;  Flour  City  Bank  v.  Grover,  88  Hun, 
4;  Harger  v.  Worrall,  69  N.  Y.  370  (25  Am.  Rep.  20G) ;  Nickerson  w. 
Rugcr,  70  N.  Y.  279;  Palmer  v.  Nassau  Bank,  78  111.380;  Shreves  ». 
Allen,  79  111.  553;  Johnsou  v.  McMiirray,  72  Mo.  278;  First  Nat,  Bank  v. 
Sproull,  105  Ala.  275  (10  So.  879);  Blum  v.  Loggins,  53  Tex.  121;  Faulk- 
ner v.  Ware,  34  Ga.  498. 

2  Scoville?;.  Landou,  50  N.  Y.  686;  Gibson  v.  Miller,  29  Mich,  355  (18 
Am.  Rep.  98).  ■ 

3  Palmer  v.  Whitney,  21  Ind.  58. 

*  Commissioners  v.  Clark,  94  U,  S.  278;  Goodman  v.  Simonds,  20 
How.  343;  Seymour  v.  Malcolm  «tc.  Lumber  Co.,  58  Fed.  957;  7  C.  C,  A, 
593;  Mechanics'  &c.  Batk  v.  Crow,  60  N.  Y.  85;  Belmont  Branch  Bank  v. 
Hoge,  35  N.  Y.  65;  Davis  v.  Bartlett,  12  Ohio  St.  534  (80  Am.  Dec.  375)  ; 
Kelraan  v.  Calhoun,  43  Neb,  157  (61  N,  W.  615)  ;  Peabody  v.  McAvoy,  23 
Mich.  526;  Little  v.  Mills,  98  Mich,  423  (57  N.  W.  266) ;  Davis  v.  Blauton, 
71  Miss.  521  (15  So.  132);  Lathrop  v.  Donaldson,  22  Iowa,  234. 

8  BiBsell  r.  Morgan,  11  Cush,  198. 

18  273 


§    113  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

Where,  however,  fraud  or  illegality  is  proven  to  have 
infected  the  original  transaction,  it  is  generally  held  that 
the  burden  of  proof  of  bona  fide  ownershi[)  is  shifted  to  the 
holder,  on  the  ground  that  it  is  easier  for  him  to  prove 
affirmatively  that  he  took  the  paper  for  value. ^ 

The  burden  of  proof  shifts  to  the  holder,  also,  where  it  is 
shown  that  the  bill  or  note  has  been  lost  or  stolen. ^  But  it 
seems,  however,  in  either  case,  that  the  burden  of  proof 
shifts  again  to  the  maker  or  other  defendant,  when  the 
holder  has  proven  that  he  has  paid  value  for  it.  According 
to  some  of  the  authorities,  he  is  not  required  to  prove 
affirmatively  that  he  took  the  paper  without  notice.^ 

1  Smith  V.  County  of  Sac,  11  Wall.  139;  Stewart  v.  Lansing,  104  U.  S. 
505;  Sullivan  v.  Langley,  120  Mass.  437;  Emerson  v.  Burns,  114  Mass. 
248;  Merchants'  Exch.  Nat.  Bank  v.  Sav.  Inst.,  32  N.  J.  L.  170;  Naples  v. 
Brown,  48  Pa.  St.  458;  Sloan  v.  Union  Bkg.  Co.,  67  St.  470;  First  Nat. 
Bank  v.  Green,  43  N.  Y.  298;  Grant  v.  Walsh,  145  N.  Y.  502  (40  N.  E. 
209)  ;  New  v.  Walker,  108  Ind.  3G5  (9  N.  E.  38G)  ;  Sperry  v.  Spaulding,  45 
Cal.  544;  Hodson  v.  Eugene  Glass  Co.,  156  111.  897  (40  N.  E.  971)  ;  Fau- 
cett  V.  Powell,  43  Neb.  437  (61  N.  W.  586);  Merchants  &c.  Nat.  Bank  v. 
Trustees  of  Masonic  Hall,  62  Ga.  271 ;  Campbell  v.  Hoff,  129  Mo.  317  (31 
S.  W.  603)  ;  French  v.  Talbot  Pav.  Co.,  100  Mich.  443  (59  N.  W.  166). 

2  Worcester  Co.  Bank  v.  Dorcester  &c.  Bank,  10  Cush.  488  (57  Am. 
Dec.  120) ;  Kuhns  v.  Gettysburg  Nat.  Bank,  68  Pa.  St.  445;  Union  Bank 
V.  Barber,  5.6  Iowa,  559  (9  N.  W.  890) ;  Dutchess  Co.  Ins.  Co.  v.  Hatch,  1 
Hun,  675, 

3  Kellogg  V.  Curtis,  69  Me.  212  (31  Am.  Rep.  273);  Quinn  v.  Hard,  43 
Vt.  375  (5  Am.  Rep.  284) ;  Battles  v.  Loudenslager,  84  Pa.  St.  446;  Davis 
V.  Bartlett,  12  Ohio  St.  534  (80  Am.  Dec.  375) ;  Wright  v.  Irwin,  33  Mich. 
82;  Harbison  v.  Bank  of  Indiana,  28  Ind.  133  (92  Am.  Dec.  308);  Jones 
V.  Burden,  56  Mo.  App.  199;  Johnson  v.  McMurray,  72  Mo.  282.  But  see 
contra,  Camden  Safe  Dep.  Co.  v.  Abbott,  43  N.  J.  L.  257;  Vosburgh  v. 
Dieffendorf,  119  N.  Y.  357  (23  N.  E.  801;  Tilden  v.  Barnard,  43  Mich.  376 
(38  Am.  Rep.  197)  ;  Haggland  v.  Stuart,  29  Neb.  69  (45  N.  W.  263). 

274 


f 


CH.   IX. J  RIGHTS    OF    BONA    FIDE    HOLDERS.  ILL.   CAS. 

ILLUSTRATIVE  CASES. 

Jennings  V.  Todd,  118  Mo.  296  (24  S.  W.  148). 

Geddes  v.  Blackniore,   132  Ind.  551   (32  N.  E.  567"). 

Dreilling  v.  First  Nat.  Bank,  43  Kan.  197  (23  P.  94). 

Roberts  v.  Hall,  37  Conn.  205. 

Goshen  Nat.  Bank  v.  Bingham,  118  N.  Y.  319  (23  N.  E.  180). 

Matson  v.  Alley,  141  111.  284  (31  N.  E.  419). 

Handy  r.  Sibley,  46  Ohio  Si.  329  (17  N.  E.  329). 

Failure    or  Xon-perforinance    of    Cousideration  no  De- 
fense Against  a  Bona  Fide  Holder. 

Jennings  v.  Todd,  118  Mo.  290  (24  S.  W.  148). 

Macfarlank,  J.  This  is  a  suit  in  equity  to  restrain  defendant 
Todd,  as  trustee,  from  selling  under  a  deed  of  trust  certain  real 
estate  belonging  to  plaintiffs,  and  to  cancel  a  note  made  by  them 
to  Potter,  Chase  &  Co.  or  order,  and  lield  b}'  defendant  Bush  as 
assignee.  The  petition  charges,  in  substance,  that  on  the  23d 
day  of  October,  1888,  i)laintiff  James  1.  Jt  nnings  entered  into  a 
contract  in  writing  with  Potter,  Chase  &  Co.,  through  C.  J. 
Chase,  a  member  of  the  firm,  by  which  the  said  company  ap- 
pointed him  ag^nt  to  control  and  manage  the  sale  of  an  illustrated 
edition  of  the  New  Testament,  and  they  agreed  to  furnish  him 
500  books  as  they  might  be  called  for  at  Kans  s  City,  at  $1  each, 
and  reciting  that  he  had  given  his  note  for  $500,  or  $1  each  on 
said  books.  In  consideration  for  tho  purchase  of  said  books  on 
said  day  i)laintiffs  executed  and  delivered  to  said  C.  J.  Chase 
their  negotiable  promissory  note  for  $500,  payable  to  said  Potter, 
Chase  &  Co.  18  months  after  date,  with  8  per  cent  Interest  from 
date,  to  secure  which  they  gave  a  deed  of  trust  on  their  said 
estate,  with  defendant  Todd  as  trustt  e.  That  by  the  terms  of 
said  contract  the  note  was  not  to  he  paid,  and  should  be  void,  if 
the  company  did  not  fulfill  every  requirement  of  the  contract. 
The  petition  charges  further  that  said  company  did  not  perform 
and  f ulliil  the  contract  in  any  particular,  but  wholly  refused  to 
supply  the  books,  as  needed  aud  demanded  by  plaintiff;  that 
plaintiff  was  induced  to  make  the  contract  by  false  and  fraudulent 
representations;  and  that  defendant  Bush  purchased  said  note 
with  full  knowledge  and  notice  of  the  fraudulent  means  by  which 
it  was  procui-ed,  and  of  the  stipulation  in  the  contract  by  which 
the  note  might  become  void.  The  answer  of  defendant  Bush 
was:  First,  in  suhstance,  a  general  denial;  second,  a  plea  of 
estoppel;  and,  third,  that  he  was  an  innocent  purchaser  of  the 
note.  In  the  plea  of  estoppel  it  was  charged  that  said  defendant 
"  purchased  said  notci  at  the  s])e(  ial  instance,  solicitation,  and 
request  of  plaintiff,  who  trld  him  he  wished  he  would  trade  for 
it;  that  if  he  would  he  would  consider  him  an  innocent  pur- 
chaser; and  that,  relying  upon  tliese  repn  sentations  to  him  bj'. 
plaintiff,  le  purchased  said  note."  Said  defendant  further 
answered  that  he  was  the  purchaser  of  said  note  before  maturity, 

275 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

in  good  faith,  for  value,  an-l  without  notice  of  any  infirmity.  The 
evidence  leaves  no  doubt  that  the  scheme  into  which  plaintiffs  were 
led  by  C.  J.  Chase  was  a  gross  fraud  and  swindle,  which  was  also 
worked  on  others,  as  was  incidentaily  shown.  It  is  unnecessary  lo 
set  out  the  contract  in  full.  It  is  not  bt  all  intelligible,  but  was 
doubtless  made  clear  and  very  beneficial  by  the  representations 
of  Chase.  It  contained  the  following  clause:  "He  havmg  set- 
tled for  one  outfit  and  book  ;  also  by  note  for  five  hundred  dollars, 
the  same  being  payment  of  ($1)  one  dollar  each  for  500  books, 
which  he  has  this  day  purchased,  leaving  a  balance  due  of  one 
dollar  on  each  book  when  ordered  or  delivered,  from  time  to  time, 
in  such  quantities  as  the  said  James  1.  Jennings  may  desire." 
On  the  back  of  the  contract  was  the  following  indorsement: 
"  Centralia,  Mo.,  Oct.  2o,  1888.  Ihe  company  hereb}^  agrees 
that  the  note  corresponding  to  the  within  contract  shall  be  null 
and  void  whenever  the  company  does  not  fulfill  every  point  of  the 
contract  as  signed.  [Signed]  C.  J.  Chase.  For  Potter,  Chase 
&  Co."  The  contract  furnishes  sufficient  evidence  that  the  books 
were  to  be  shipped  to  Jennings  from  Kansas  City  whenever 
ordered,  and  that  they  were  never  furnished,  though  often  ordered 
by  Jeniiings. 

Plaintiff  testified  that  Chase  promised  not  to  assign  the  note. 
It  ai)peaied,  however,  from  the  evidence,  that  soon  after  its  exe- 
cution he  indorsed  and  delivered  it  to  Gahan  Bros,  as  collateral 
security  for  a  note  made  b}'  Chase  to  thetn,  who  afterwards  them- 
selves indorsed  it  in  blank.  Without  further  indorsement  it  went 
into  the  hands  of  one  or  two  other  parties,  and  finally  to  defend- 
ant Bus^h  before  its  maturity,  who  paid  for  it  nearly  its  face 
value.  It  appears  at  this  time  that  neither  the  fraud  nor  breach 
of  contract  had  developed.  It  appears  further  that  on  the  2d 
day  of  October,  1888,  plaintiffs  executed  and  delivered  to  Chase 
another  note,  payable  to  the  same  company  eight  months  after 
date.  This  note  was  also  for  bot-ks  under  a  similar  contract,  but 
not  containing  the  indorsement.  Defendant  Bush  also  held  this 
note  by  purchase  at  the  same  time. 

The  only  questions  of  fact  or  law  for  our  determination  on  this 
appeal  are  wh  ther  defendant  wi.s  a  purchaser  of  the  note  in  good 
faith  and  f  r  value,  antl  whether  plaintiffs,  by  their  acts,  conduct, 
and  n  prest  utations,  are  estopped  to  dispute  its  validity.  The 
questions  of  ftict  on  both  propositions  were  found  by  the  circuit 
couit  ag;  iui-t  the  defendant.  The  evidence  of  plaintiff  and  de- 
ft ndant  Bush  was  in  dirtct  and  irreconcilable  conflict.  Each 
were  corroboiated  by  direct  evidence  of  witnesses  and  by  circum- 
stances. Plaintiff  testified  in  the  most  positive  terms  that  he 
lead  the  contract  and  indorsement  to  defendant  before  he  pur- 
chased the  note ;  and  Roberts  testified  that  he  was  present  and 
heard  them  read,  and  there  were  other  corroborating  circum- 
stances. On  the  other  hand  defendant  testified  that  he  had  no 
recollection  of  plaintiff  reading  either  the  contract  or  indorse- 
ment, and  the  fact  that  he  paid  near  the  face  value  for  the  note 

276 


CH.   IX.]  RIGHTS    OF    BON  V    FIDK    HOLDERS.  ILL.   CAS. 

is  a  circurnstauce  tending  to  corroborate  his  evidence  on  that 
question.  On  the  question  of  estoppel  defendant  testifieil  that 
he  purchased  the  notes  on  December  8,  1888.  Before  lie  bought 
them  he  went  to  Mr,  Jennings,  and  told  him  that  tiie  notes  had 
been  offered  him.  "When  I  asked  him  should  I  trade  for  the 
note,  he  snid,  'Yes,  I  wish  j'ou  would.'  He  said  :  '  Then  they 
will  be  right  here,  and  as  soon  as  ray  family  is  able  I  will  make 
the  moue^',  and  pay  them  off.  I  will  be  glad  if  you  will  purchase 
them.  It  will  not  be  like  that  other  circumstance.  I  will  con- 
sider you  an  innocent  purchaser.'  I  bought  them  on  h's  repre- 
sentation. I  h;id  no  knowledge  of  the  existence  of  any  such 
paper  as  Mr.  Jennings  had."  William  Walker  testified  that  he 
afterwards  heard  Jennings  say  that  he  considered  defendant  an 
innocent  purchaser.  On  this  question  plaintiff  himself  testified  : 
"  Mr.  Bush  talked  to  me  about  the  purchase  of  the  notes.  I  told 
him  if  anybody  was  to  get  tliem  I  would  as  soon  have  him  pur- 
chase them  as  anybod}'."  The  evidence  shows  that  deft  ndant 
purchased  the  note,  and  it  was  delivered  to  him  on  the  15tli  day 
of  December,  1888,  and  thi*.  contract  and  indorsement  were  read 
to  him  on  the  13lh  of  that  month,  and  it  was  prior  1o  this  date 
that  defendant  had  asked  plaintiff  about  buying  the  note.  At  the 
time  of  these  transactions  plauitiff  had  made  no  order  for  books 
under  this  contract. 

The  following  facts  may  be  taken  as  established  by  the  evi- 
dence: (1)  Defendant  purchased  the  note  for  value  before 
maturity;  (2)  that  he  was  aware  of  the  terms  of  the  contract 
and  tlie  indorsement  when  he  purchased;  (8)  that  plaintiff  en- 
couraged defendant  to  purchase  the  note.  The  court  found  for 
plaintiff,  and  granted  the  relief  sought  and  defendant  appealed. 

1.  That  defendant  purchased  the  note  for  value  before  maturity 
is  not  questioned,  either  under  the  pleadings  or  evid'mce.  The 
good  faith  of  the  transaction  is  ttie  only  subject  of  inquiry  on  this 
branch  of  tlie  case.  Defendant  ins'sts  that,  though  the  contract 
may  have  been  fraudulent  in  its  inception,  and  lie  may  have  been 
aware  of  tlie  questionable  methods  under  which  Chase  conducted 
his  business,  and  of  tiie  suspicious  circumstances  under  which  the 
contract  in  question  was  obtained,  and  tliat  he  also  had  knowd- 
edge  of  the  contemporaneous  written  agreement,  yet  neitiier  one 
nor  all  of  these  facts  togetiier  reUeved  tiie  note  of  its  nogotiabil- 
ity ;  that  notliing  short  of  actual  knowledge  of  tlie  fraud,  or  that 
there  had  been  a  breach  of  the  contract  before  the  not  '■  came  into 
his  hands,  could  defeat  his  right  to  enforce  his  security  against 
the  land.  In  general  one  will  be  charged  with  notice  of  a  fact 
who  has  information  wh'ch  s'lould  i)ut  him  upon  inquiry  if,  by 
following  up  sucli  information  with  diligence  and  understanding, 
the  trutli  could  liavo  been  ascertained.  It  is  now  well  settled  in 
this  State,  however,  that  the  doctiine  of  notice,  as  it  affects  tlie 
good  faith  of  transactions  generally,  does  not  apply  to  negotiable 
commercial  paper.  "Both  upon  principle  and  authority,"  sa3's 
Wagner,  J  ,  "  and  from  th^  experience  of  jurists  and  commercial 

277 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

men,  aud  the  interests  of  the  affairs  of  business  life,  it  is  safe  to 
say  that  the  liberal  doctrine  which  promotes  the  free  circulation 
of  negotiable  instruments  is  the  best,  aud  that  the  good  faith  of  the 
transaction  sliould  be  the  decisive  test  of  the  holders  of  rights." 
Hamilton  v.  Marks,  63  Mo.  178.  Since  the  decision  in  that  case 
it  has  been  settled  law  in  this  State  ''  that  the  consideration  of 
negotiable  paper  in  the  hands  of  a  bona  fide  holder  for  value  before 
maturity  cannot  be  inquired  into.  Mala  fides  alone  can  open  the 
door  to  such  inquiry.  Gross  negligence  even  is  not  sufficient ; 
actual  notice  of  the  facts  which  impeach  the  validity  of  the  note 
must  be  brought  home  to  the  holder."  Mayes  v.  Robinson,  93 
Mo.  122;  5  S.  W.  611. 

2.  The  next  inquiry  is,  were  the  rights  of  defendant,  as  indorsee 
of  the  note,  affected  b}^  knowledge  of  the  transaction  which  was 
the  consideration  of  the  note,  and  of  ihe  indorsement  on  the  back 
of  the  contract.  The  contract,  indorsement  and  note  have  the 
same  date,  and,  as  the  evidence  shows,  were  made  at  the  same 
time.  According  to  the  general  rule  of  construction,  in  general 
business  matters,  tliese  l)eing  all  made  at  the  same  time,  and 
relating  to  the  same  iransaction,  should  be  read  and  construed 
together;  but  should  tliat  rule  be  applied  when  on(3  of  the  instru- 
ments is  a  negotiable  securit}'?  It  is  said  that  the  rule  may  be 
applied  to  the  construction  of  a  contemporaneous  written  contract 
affecting  the  terms  of  negotiable  paper,  "  in  so  far  as  each  may 
be  given  effect,  and  there  is  no  repugnanc}^  between  them.' 
Daniel  Neg.  Inst.,  §  156.  The  rule  is  frequently  applied  to  col- 
lateral agreements  for  lenewals,  for  the  payment  of  an  additional 
sum  upon  a  contingency,  for  the  same  consideration,  aud  fixing 
a  tune  for  pa3'raent  of  note  or  int'  rest.  Id.  An  indorsee  with 
notice  will  he  bound  b\-  such  agreements.  They  are  not  repug- 
nant to  the  negotiable  character  of  the  note.  We  think,  however, 
that  no  well-considered  case  can  be  found  in  which  a  collateral 
contemporaneous  agreement  providing  that  the  note  should  not 
be  paid  in  the  tvcnt  that  an  executory  contract,  which  was  the 
consideration  of  the  note,  should  not  be  performed,  has  been 
allowed  to  defeat  the  negotiability  of  the  note  in  the  hands  of  an 
indorsee  though  he  had  not'ce  of  such  agreement.  A  great  part 
of  the  improvement  of  the  country  and  of  business  generally'  is 
carried  on  with  money  rai-ed  bv  the  discount  of  notes  given  upon 
executory  contracts,  and  if  the  maker  could  be  allowed  to  defend 
against  such  notes,  in  case  of  a  breach  of  contract  on  the  ground 
that  the  indorsee,  though  in  other  respects  bona  fide,  had  knowl- 
edge of  the  transaction  out  of  which  the  note  grew,  all  confi- 
dence in  such  not«^s  as  iiegoiaMe  paper  would  be  destroyed,  and 
such  business  W''uld  be  paralyzed.  By  making  and  delivering  a 
negotiable  note  the  maker  is  hehl  to  intend  that  it  may  be  put  in 
circulation,  and  liiat  no  defenses  against  it  exist.  In  purchasing 
such  note  no  inquiry  as  to  the  consideration  is  required. 
If  a  failure  of  consideration  occur,  the  maker  must  look 
to    the     payee    for     indemnity.       On     this     subject     Parsons, 

278 


CH.    IX.]  RIGHTS    OF    BONA    FIUE    HOLDERS.  ILL.   CAS. 

in  his  work  on  Bills  and  Notes  (volume  1,  p.  261),  says: 
"Knowledge  on  the  part  of  the  holder,  at  the  time  he  took  the 
note,  that  it  was  not  to  be  paid  on  a  specified  contingency,  is  not 
snllicicnt  to  defeat  his  light  to  recover,  although  the  contmgency 
had  then  happened,  if  he  was  ignorant  cf  this  fact.  See,  also, 
Miller  v.  Oltaway.  81  Mich.  19G  ;  45  N.  W.  40;") ;  Adams  v.  Smith, 
35  Me.  324  ;  Kelso  v.  Frye,  4  Hibb,  493  ;  Dowr.  Tuttle,  4  Mass. 
414  ;  Davis  v.  McCrendy,  17  N.  Y.  230  ;  Tied.  Com.  Paper,  §  42, 
and  cases  cited.  If  tiie  breach  had  occurred  to  the  knowledge 
of  the  indorsee  when  he  purchased  he  would  not,  of  course,  be 
protected.  The  settled  rules  of  law  governing  commercial  |)ai)er, 
upon  the  stability  of  which  alone  can  the  usual  business  of  tin- 
country  be  trans-icted,  cannot  be  disregarded  in  order  to  relieve 
a  few  unwary  persons  from  the  result  of  transactions  into  which 
they  have  been  drawn  by  their  own  cr  dulity  or  cupidiiy.  Upon 
careful  consideration  we  think  tlie  contract  affoided  no  defense 
to  the  note  which  was  purchased  before  a  breach  occurred. 

3.  The  next  question  is  whether  plaintiff  is  estopped  by  his  state- 
ments and  conduct  to  dispute  the  validity  of  the  notes  in  the 
hands  of  defendant.  If,  at  the  time  the  representations  were 
made,  there  had  already  l)een  a  breach  of  t  e  contract,  or  other 
defenses  ex'sted,  it  wouM  have  l)een  the  duty  of  plaintiff  to  have 
si)oken,  and,  not  having  done  so  then,  he  should  not  thereifter 
be  allowed  to  deny  the  truth  of  his  representations.  But  at  ihe 
time  the  representations  were  made  there  had  been  no  breach  of 
the  contract,  and  plaintiff,  so  far  as  appears,  had  no  reason  to 
suspect  that  one  would  occur.  The  representations  can  l)e  taken, 
then,  as  referring  to  the  existing  status  of  the  note,  and  to  de- 
fenses then  known,  and  did  not  exclude  such  as  might  subse- 
quently arise.  Daniel  Neg.  Int.,  §  860,  and  the  following  casts 
cited,  which  fullv  sustain  the  text:  Maury  v.  Coleman,  24  Ala. 
382;  Cloud  v.  Whiting,  38  Ala,  57;  Allen  v.  Frazee,  85  Ind. 
283;  Koons  v.  Davis,  84  Ind.  380.  If  plantiff  had  made  an 
a])solute  promise  to  piy  the  note,  he  miglit  have  precluded  him- 
self from  making  defenses  subsequen'Iy  urisiiiir.  Defendant's 
own  testimony  did  go  so  far  as  to  claim  an  absolute  promise. 
He  states  that  when  he  told  plaintiff  that  he  was  about  buying 
the  noti  s  he  replied:  "I  wish  >  cm  would  trade  fortlum,  then 
they  will  be  right  here,  and  as  soon  as  ray  famil}'  gets  able  I  will 
try  to  make  the  money  and  pay  them  off,  I  will  consider  you  an 
innocent  purchaser;  and  wi.-h  j-ou  would  get  them."  Plaintiff 
testified:  '•  I  told  him  that  !Mr,  Cha'^e  had  promised  to  keep  ihe 
notes  himself,  but,  as  he  had  traded  them  off  alrcad\',  I  suppose 
I  would  as  soon  he  would  have  them  as  anybody  else."  We 
think  the  proI)ability  is  that  the  s'atunent  of  plaintiff  is  nearest 
correct,  and  that  there  was  no  absolu'e  promise  1o  \^ny  tlie  note. 

4.  'Ihe  Controlling  question  is  whether  the  defendant  had  notice 
of  the  fraudulent  intent  of  Chase,  or  part'cipated  in  acc'mi)lish- 
ing  it.  Tlie  fraudulent  scheme  of  Chase  was  well  developed  by 
the  evidence.     His  efforts  were  directed  to  inducing  parties  lo 

279 


ILL.    CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

enter  into  an  agreement  to  manage  the  sale  of  a  book  in  certain 
localities,  and,  by  pointing  out  the  profits  they  could  realize  hy 
])urchasing  a  lot  of  books,  the  sale  of  which  they  could  control 
themselves,  to  obtain  from  them  negotiable  notes  payable  in  the 
future.  He  remained  in  the  neighborhood,  furnishing  to  the 
parties  taking  hold  of  the  scheme  books  as  they  were  sold  until 
he  had  obtained  all  the  notes  he  could  procure.  He  then  sold  the 
notes,  left  the  neighborhood,  and  refused  to  furnish  books  to 
those  who  had  purchased.  He  boarded  at  a  hotel  in  Centralia. 
Defendant  frequently  visited  him  at  his  hotel.  This  he  admitted. 
Said  he  went  because  he  "liked  to  hear  him  go  over  his  pros- 
pectus." Defendant  introduced  Chase  to  plaintiff.  He  hunted 
him  up  for  that  purpose.  On  the  introduction  he  went  to  the 
hotel,  and  was  present  during  a  part  of  the  interview  between 
them.  For  this  introduction  Chase  paid  him  $50.  He  told  a 
friend,  who  upbraided  him  with  getting  plaintiff  into  trouble,  that 
he  had  a  "  right  to  work  for  a  commission  as  much  so  as  any- 
body else  had  in  any  other  kind  of  business."  Defendant  testi- 
fied that  he  told  plaintiff  that  if  he  did  not  get  the  books  he 
would  not  be  hurt,  for  it  was  written  in  the  contract  that  in  that 
event  the  note  would  be  null  and  void.  "  He  asked  me  if  it  was 
written  on  the  note,  and  I  told  him  that  it  was  not.  He  said  if 
that  was  written  on  the  note,  then  IMr.  Chase  could  not  trade  it 
off."  It  will  be  observed  that  the  fraud  of  Chase  was  not  in  the 
character  of  the  contracts  made,  but  in  a  predetermined  intention, 
after  obtaining  and  selling  the  notes,  not  to  comply  with  the 
contract.  This  fact  should  be  kept  in  mind  in  considering  the 
good  faith  of  Bush  in  the  matter.  It  is  insisted  that  the  evidence 
establishing  the  foregoing  facts  fixes  upon  defendant  Bush  the 
knowledge  of  the  fraudulent  intent  of  Chase,  and  we  would  be 
of  that  opinion  if  it  disclosed  all  the  facts  and  circumstances 
in  the  case.  The  fact  that  Chase  paid  Bush  $50  for  an 
introduction  to  Jennings,  standing  alone,  ought  to  be  in  itself 
a  conclusion  of  knowledge  of,  if  not  participation  in,  the 
intended  fraud.  But  that  fact  does  not  stand  alone.  It  seems 
from  the  evidence  to  have  been  well  understood  —  in  fact, 
no  secret  was  made  of  it  in  the  neighborhood  —  that  any  per- 
son would  be  paid  by  Chase  a  like  commission  for  introducing 
one  who  would  enter  into  a  contract  such  as  plaintiff  made. 
Jennings  admitted  that  he  was  informed,  before  he  entered  into 
the  contract,  that  Bush  was  to  be  paid  for  introducing  him.  He 
himself  afterwards  obtained  a  reward  for  introducing  a  Mr. 
Green  to  Chase,  and  admitted  that  he  had  also  tried  to  induce 
others  to  make  contracts.  If  we  charge  defendant  with  notice  of 
the  fraud,  we  must  also  charge  ]ilaintiff  with  knowledge.  He 
disclaims  such  knowledge.  Why,  then,  should  we  charge  knowl- 
edge upon  defendant?  He  paid  nearly  the  face  value  for  the 
note,  which  is  a  strong  circumstance  in  his  favor.  We  should 
attribute  to  each  party  honesty  of  purpose  in  the  absence  of  proof 
to  the  contrary.     It  is  evident,  we  think,  from  all  the  circum- 

280 


CH.  IX.]  RIGHTS    OF    BONA    FIDE    UOLDERS.  ILL.   CAS. 

stances,  that  both  parties  honestly  believed,  wheu  the  transfer  of 
the  note  was  made,  that  the  contract  would  be  fully  performed. 
We  ihink  from  the  evideuce  before  us  that  the  defendant  at  most 
had  a  mere  suspicion  that  the  contract  would  not  be  carried  out. 
This,  as  has  been  seen,  was  not  sufficient  to  stamp  his  purchase 
with  bad  faith.  The  question  of  right  between  these  parties  is 
undoubtedly  a  close  one.  The  case  was  evidently  tried  by  plain- 
tiff upon  the  theory  that  notice  of  the  contract  and  the  indorse- 
ment thereon  was  sufficient  to  charge  defendant  with  bad  faith  in 
buying  the  note.  Upon  a  trial  of  fact  by  a  chancellor,  when  the 
evidence  is  so  nearly  balanced,  we  are  not  disposed  to  disturb 
the  result  reached  ;  but  in  this  case,  in  which  no  specific  findings 
were  asked  by  counsel  or  made  by  the  court,  we  cannot  deter- 
mine whether  the  finding  was  upon  the  question  of  notice  or  was 
controlled  by  some  of  tlie  legal  propositions  herein  discussed. 
With  the  view  we  take  of  the  law,  we  are  not  satisfied  with  the 
finding.  We  therefore  reverse  the  judgment,  and  remand  the 
cause  for  a  retrial,  if  the  parties  desire  it.  All  concur,  except 
Barclay,  J. ,  who  is  absent. 


Liability  to  Bona  Fide  Holder  of  One  Who  Signs  a  Xote 
or  Bill  in  Blank,  wliicli  is  Delivered  to  Another  to  Fill 
Up. 

Geddes  v.  Blackmore,  132  Ind.  551  (32  N.  E.  507). 

Olds,  J.  The  appellee,  Charles  Blackmore,  brought  this  action 
against  the  appellants  Daniel  T.  Geddes  and  William  Winder  on 
a  promissory  note  dated  August  15,  1884,  due  in  one  day  after 
date,  payable  to  said  Charles  Blackmore,  for  $1,000,  with  8  per 
cent  interest,  and  signed  by  said  Daniel  T.  Geddes  and  William 
Winder.  Geddes  was  defaulted,  and  Winder  answered  in  three 
paragraphs  :  First,  a  general  denial ;  second,  a  general  plea  of  7ion 
est  factum;  and,  third,  setting  up  an  alteration  of  the  note.  There 
was  a  trial  by  jury,  and  a  special  verdict  returned.  The  facts  found 
by  the  jury  in  their  special  Acrdict  show  that  the  appellant  William 
Winder  signed  a  printed  blank  form  of  promissory  note,  the  date  of 
the  note,  date  of  maturity,  auKuint,  and  name  of  payee  all  being 
blank  ;  and  intrusted  it  to  Geddes,  with  verbal  instructions  to  pur- 
chase hogs  for  a  firm  composed  of  said  William  and  Asbury 
Winder,  and  to  fill  the  blanks  in  the  note,  and  deliver  the  same 
to  the  person  from  whom  he  purchased  hogs,  filling  the  dates. 
The  amount  and  name  of  the  payee  were  to  be  filled  by  inserting 
the  amount  to  be  paid  for  the  hogs  and  the  name  of  the  person 
from  whom  the  hogs  were  purchased.  Geddes  violated  his 
instructions,  and  used  the  note  to  borrow  $1,000  of  appellee, 
Blackmore,  filling  the  blank  amount  at  $1,000,  and  the  name  of 
Blackmore  as  payee.  lie  filled  the  other  blanks,  and  signed  the 
note  himself  as  one  of  the  payors,  delivered  the  same  to  Black- 
more,  and  received  from  him  $1,000.     Geddes  purchased  no  hogs 

281 


0 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

of  Blackmore,  and  did  not  use  any  of  the  money  for  the  purchase 
of  any  hogs  for  said  William  Winder  or  the  firm  of  Winder  & 
Winder ;  and  neither  Winder  nor  Winder  &  Winder  received  any 
of  the  money.  That  the  use  made  of  the  note  was  unauthorized 
by  Winder,  and  was  without  his  knowledge  and  contrary  to  his 
instruction.  Both  the  appellee  and  the  appellant  Winder  moved 
for  judgment  on  the  special  verdict,  and  the  court  overruled  the 
motion  of  Winder  and  sustained  the  motion  of  the  appellee, 
Blackmore,  and  rendered  judgment  in  his  favor  for  the  amount 
found  due  on  the  note.  These  rulings  of  the  court  on  the  motions 
for  judgment  are  assigned  as  errors. 

The  facts  found  show  that  Geddes  violated  the  confidence 
reposed  in  him  by  appellant  Winder,  disobeyed  his  instructions, 
and  used'the  note  for  another  purpose  than  that  for  which  it  was 
intended,  but,  notwithstanding  such  violation  of  confidence,  the 
appellant  is  liable  on  the  note.  In  Roberts  v.  Adams,  8  Port. 
(Ala.)  297,  the  court  says :  "  No  rule  can  be  better  settled  than 
the  one  which  determines  that  he  who  signs  his  name  to  a  blank 
piece  of  paper  with  intent  to  be  filled  up  as  a  note  or  indorse- 
ment will  be  liable,  although  the  person  intrusted  therewith  shall 
violate  the  confidence  reposed  in  him  by  filling  it  up  with  another 
sum,  or  using  it  for  another  purpose,  than  the  one  intended ;  " 
and  many  autliorities  are  cited  in  support  of  this  doctrine.  The 
same  rule  is  adhered  to  by  this  court.  In  Wilson  v.  Kinsey,  49 
lud.  35,  it  was  held  that  when  a  party  signed  a  promissory  note 
in  blank  and  intrusted  it  to  another  to  discount  the  note  at  bank, 
a  blank  being  left  for  the  name  of  the  payee,  and  the  note  was 
negotiated  to  a  third  party,  and  his  name  inserted  as  payee,  the 
person  so  signing  the  note  was  liable.  In  that  case  Kinse}^ 
signed  the  note,  and  intrusted  it  to  one  Butler  to  negotiate ;  and 
the  court  says:  "We  do  not  doubt,  in  view  of  the  evidence, 
that  when  the  note  was  signed  Butler  intended  to  negotiate  it 
at  the  bank ;  but  we  find  no  evidence  of  any  agreement  be- 
tween him  and  Kinsey  that  he  should  not  negotiate  it  else- 
where. Had  Kinsey  insisted  upon  any  such  thing,  it  seems 
probable  that,  when  the  subject  of  rcsiricting  the  authority  of 
Butler  was  under  consideration,  he  would  have  insisted  upon 
having  the  blank  for  the  name  of  the  i)ayee  filled,  as  well  as 
the  ones  which  he  insisted  on  having  filled  before  he  parted 
with  the  paper.  This  he  did  not  do,  but  permitted  the  i)aper  to 
go  out  into  the  market  as  it  was.  In  that  condition  it  fell  into 
the  hands  of  Wilson,  who  paid  value  for  it,  and  who,  as  we  think, 
is  not  charged  with  notice  of  anything  which  can  affect  his  right 
to  recover  upon  the  note."  Cornell  v.  Nebeker,  58  Ind.  425, 
supports  the  same  doctrine.  In  this  case  Geddes  was  not 
restricted  to  fill  in  the  name  of  any  particular  person  as  payee, 
or  to  any  amount.  It  is  true  he  was  intrusted  with  the  note  for 
the  purpose  of  filhng  in  tlie  blank,  and  to  negotiate  it  in  payment 
of  hogs,  to  be  purchased  by  him  for  the  firm  of  Winder  &  Win- 
der ;  but  he  was  intrusted  with  the  blank  with  authority  to  fill  the 

282 


CH.    IX.]  RIGHTS    OF    150KA    FIDF:    HOLDERS.  ILL.  CAS. 

blanks,  and  negotiated  it  for  a  particular  purpose,  and  he  violated 
the  confidence  i-eposed  in  liim,  and  negotiated  it  for  another  i)ur- 
pose.  Winder,  by  tlie  signing  of  the  note  in  blank,  and  intrust- 
ing it  to  Geddes  to  fill  the  blanks  and  negotiate  it,  placed  it  in 
the  power  of  Goddes  to  accomplish  just  what  he  did  accomplish, 
viz.,  fill  the  ])lank-!,  and  negotiate  it  1o  Blackmore,  and  secure  a 
loan  of  $1,000;  and  the  rule  seems  to  be  well  settled  that  when 
a  person  signs  his  name  to  a  blank  note,  and  intrusts  it  to  anotlu  r, 
he  thereby  gives  such  person  authorit}'  to  fill  it  up  in  any  manner 
he  plea«es,  not  inconsistent  with  the  character  of  such  blank 
paper,  and  a  p;irty  taking  it  will  be  protected.  See  Davis 
V.  Lee,  2G  Miss.  505;  Abbott  v.  Rose,  62  Me.  194. 
Nor  do  we  think  Winder  was  relieved  from  liability  by 
reason  of  the  fact  that  Geddes  signed  his  own  name  to 
tiie  note  as  one  of  the  payors  or  makers.  Winder  by  in- 
trusting the  note  to  Geddes,  authorized  him  to  fill  the  note  out 
in  any  manner  he  i)leased,  not  inconsistent  with  the  character  of 
such  blank.  The  filling  of  it  as  he  did,  and  signing  his  own 
name  with  that  of  Winder  as  payee,  was  perfectly  consistent 
with  the  character  of  the  blank  so  signed  by  Winder.  It  enabled 
Geddes  to  do  just  what  the  facts  fouud  show  that  he  did  do.  He 
first  met  Blackmore  on  the  street,  and  informed  him  that  he 
would  i)rol)al)ly  want  to  make  the  loan  of  him  on  a  note  signed 
by  Winder,  then  filled  the  blanks,  and  signed  it  himself,  and 
negotiated  it,  and  obtained  the  money  upon  it.  The  fact  is 
found  that  on  the  same  day  Winder  was  also  in  town,  and  that 
Blackmore  knew  it,  and  made  no  mention  of  the  fact  in  regard  to 
the  loan  to  Winder;  but  this  fact  carries  no  notice  to  Blackmore 
of  the  unauthorized  use  of  tlie  paper,  ])iit  rather  conveys  to  him 
knowledge  that  Winder  was  witliin  reach,  so  tliat  Geddi's  could 
and  had  procured  Irs  signature  for  the  purpose  of  the  loan. 
Tiiere  is  a  general  finding  at  the  close  of  the  verdict  that  Winder 
did  not  execute  the  note,  but,  in  view  of  the  form  of  tlie  verdict, 
tiiis  must  be  treated  as  a  mere  conclusion  drawn  from  the  other 
facts  found.  As  all  tlie  facts  relating  to  the  signing,  delivery, 
filling  blanks,  and  knowledge  and  instructions  are  very  fully  set 
out  and  found  by  the  jury,  and  it  is  clearly  apparent  that  the 
latter  statement  is  intended  as  a  conclusion  drawn  from  the  facts 
previously  slated  and  fouud  by  the  jury,  we  think  there  was  no 
error  in  the  lulings  of  the  court  on  the  motions  for  judgment. 
Judgment  alfirmed,  widi  costs. 


Bank  not  a  H<)l(!<*r  for  Value  which  Di.scouiits  Pai)or 
and  Places  Amount  to  Credit  of  tli<'  Depositor  and 
Indorsee. 

Dreillingw.  First  Nat.  Bank,  43  Kan.  197  (23  P.  94). 

Holt,  C.  This  was  an  action  in  the  Ellis  district  court  on  a 
negotiable  promissory  note.  Trial  by  jury.  The  court  directed 
them  peremptorily  to  find  for  the  [)ljiutiff  for  the  unpaid  balance 

283 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  fcil.  IX. 

of  the  note.  The  defendants,  as  plaintiffs  in  eiTor,  complain  of 
this  direction  of  the  court,  and  of  certain  rulings  concerning  the 
l)lea(iings.  The  action  was  commenced  by  the  First  National 
Hank  of  Battle  Creek  as  plaintiff.  Afterwards  the  court  per- 
mitted a  supplemental  petition  to  be  filed,  wherein  none  of  tlie 
nllegatioiis  of  the  original  petition  were  repeated  upon  wliich  the 
plaintiff  relied  to  recover,  but  simply  stated  that  after  tlie  cora- 
meucement  of  tliis  action  the  First  National  Bank  of  Buttle  Creek 
and  the  Second  National  Bank  of  Battle  Creek  had  been  consoli- 
dated under  the  name  of  "The  National  Bank  of  Battle  Creek."  This 
supplemental  pleading  was  authorized  by  section  144,  Civil  Code. 
Clark  V  Spencer,  14  Kan.  398;  Simpson  v.  Vose,  31  Kan.  227;  1 
Pac.  Rep.  601. 

The  defendants  answered  the  original  petition  by  a  sworn 
denial,  and  also  b}^  setting  up  other  matters  of  defense.  The 
plaintiff  replied  by  a  general  denial.  After  the  supplemental 
petition  was  filed,  the  defendants  again  answered  fully  as  to  the 
merits  of  the  action,  but  set  up  no  new  matter,  only  more  elab- 
orately and  full}^  stating  their  defenses  as  set  forth  in  their  first 
answer.  After  tliis  second  answer  there  was  no  reply  filed.  None 
was  necessary.  The  allegations  of  the  answer  had  been  once 
denied  substanlially  by  the  reply  to  the  defendants'  original  an- 
swer. This  was  sufficient.  Brookover  v.  Esterly,  12  Kan.  149  ; 
Cooper  V.  Machine  Co.,  37  Kan,  231 ;  15  Tac.  Rep.  235. 

At  the  trial  the  plaintiff  showed  that  it  bought  the  note  before 
due  without  knowledge  of  any  defenses  there  might  be  to  it.  The 
note  was  given  in  payment  of  a  threshing-machine.  In  the  sale 
of  this  machine  a  wari'anty  was  given ;  and  the  defense  urged  was 
that  there  had  been  a  breach  of  the  warranty,  and  therefore  a 
failure  of  consideration.  The  court  required  of  ^the  defendants, 
before  proof  of  this  warranty  and  its  breach  could  be  offered, 
that  they  should  show  that  the  note  wns  either  transferred  after 
due,  or  else  was  not  transferred  for  a  valuable  consideration  ;  or 
that,  if  plaintiff  took  it  before  due,  he  took  it  with  notice  of 
the  defenses  which  defendants  had  against  it.  The  defendants 
proffered  evidence  to  show  the  warranty  and  its  breach,  but 
neither  offered  or  attempted  to  establish  either  one  of  the  three 
propositions  suggested  by  the  court. 

The  defendants  complain  of  this  ruling,  first,  because  the  court 
arbitrarily  directed  their  order  of  proof.  It  had  the  right  to  do 
so,  and  did  not  abuse  its  discretion  in  its  requirements.  In  fact, 
it  was  the  proper  order  for  the  court  to  make.  Ordinarily,  a 
party  has  latitude  in  introducing  his  testimony  ;  but  in  this  case 
it  would  have  been  an  idle  thing  to  have  introduced  testimony 
concerning  the  warranty  and  its  breach  when  it  hnd  been  fairly 
established,  by  evidence  prima  facie,  that  plaintiff  was  a  bona  fide 
purchaser  of  the  note  before  maturity.  All  defenses  which  might 
have  been  urged  against  the  original  payee  thereof  were  cut  off 
in  an  action  by  the  holder,  who  purchased  before  maturity,  with- 
out notice,  and  for  a  valuable  consideration. 

284 


CH.   IX.]  RIGHTS    OF    BOxVA    FIDE    HOLDERS.  ILL.   CAS. 

The  defendants  urge,  secondly,  that  the  evidence  offered  by  the 
plaintiff  does  not  show  it  to  have  been  a  bona  lide  purchaser  of 
the  note.  The  testimony  estabhsiied  that  tlie  First  National  Bauk 
of  Battle  Creek  took  this  note  at  its  face  value  before  due,  and 
gave  Nichols,  Shepherd  &  Co.,  the  original  payees  of  the  note, 
credit  ou  their  account.  When  the  nose  was  taken,  Nichols, 
Shepherd  &  Co.  had  a  balance  at  the  bank  to  their  credit  of  over 
$10,000 ;  and  it  was  proveir  that  up  to  the  time  of  this  action 
their  balance  had  never  been  less  that  $10,000.  The  testimony 
of  Victor  P.  Collins,  president  of  the  bank,  shows  that  the  amount 
of  the  credit  of  Nichols,  Shepherd  &  Co.  at  the  bank  when  this 
note  was  placed  to  their  credit  has  since  been  drawn  out  many 
times,  and  rei>laced  by  new  deposits,  so  that  the  amount  to  the 
credit  of  Nichols,  Shepherd  &  Co.,  though  often  changed  in 
character,  had  not  been  materially  diminished  in  amount,  but  had 
been  kept  good  by  other  notes,  drafts,  and  moneys  deposited 
subsequently.  It  is  probably  true  that  simply  discounting  a  note, 
and  crediting  the  amount  thereof  on  the  iudorser's  account,  with- 
out parting  with  any  value  for  it,  is  not  enough  to  constitute  such 
bank  a  bona  fide  purchaser  of  the  note.  In  this  instance,  how- 
ever, this  transaction  was  simply  placing  the  note  to  the  credit  of 
Nichols,  Shepherd  &  Co.  alone ;  for  they  subsequently  checked 
against  it,  and  exhausted  the  amount  of  their  credit  at  the  time  this 
note  was  placed  to  their  account,  including  the  amount  of  this 
note.  We  think  the  fact  of  thus  paying  out  the  full  amount  makes 
them  i)urchasers.  It  is  conceded  that  the  bank  did  not  buy  the 
note  outright,  and  pay  for  it,  at  that  time;  but  they  certainly 
were  debtors  to  Nichols,  Shepherd  &  Co.  for  its  amount ;  and  the 
general  rule  as  to  the  application  of  payments,  when  there  are  no 
special  facts  to  interfere,  is  that  the'^lirst  payments  go  to  the 
oldest  debts.  Under  this  lule,  the  bank  paid  for  it  by  allowing 
Nichols,  Shepheicl  &  Co.  to  check  against  and  exhaust  the 
amount  of  their  credit  at  that  lime.  This  note  was  a  i)art  of  that 
credit.  It  paid  for  it  by  cashing  checks  drawn  upon  it,  and  thus 
became  a  purchaser  of  the  same  for  value.  Fox  v.  Bank,  30 
Kan.  441  ;  1  Tac.  Kep.  789  ;  Maim  v.  Bank,  30  Kan.  412  ;  1  Pac. 
Rep.  579  ;  Rand.  Com.  Paper,  §  994. 

The  other  errors  complaiued  of  do  not  require  mention,  and 
we  recommend  that  the  judgment  be  affirmed. 

Per  Curiam.     It  is  so  ordered  ;  all  the  justices  concurring. 


What  is  Meant  by  Usual  Course  of  Business. 

Roberts  v.  Hall,  37  Conn.  205. 

Caupentek,  J.  The  facts  of  this  case  are  briefly  these:  The 
note  in  suit  is  one  of  two  notes,  given  for  the  purchase-money  of 
certain  property  sold  to  the  defendant  l)y  one  Yale.  The  de- 
fendant was  induced  by  fraud  to  give  his  notes  for  $700,  for 
property  which  was  worth  but  $400.     The  day  after  the  sale  the 

285 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

fraud  was  discovered  by  the  defendant,  who  thereupon  offered 
to  return  the  property  to  Yale,  and  demanded  a  return  of  his 
notes,  but  Yale  refused  to  accept  the  property  iind  return  the 
notes.  The  other  note,  and  $79  of  this  note,  were  paid  to  Yale 
from  the  avails  of  certain  collaterals,  which  payments  exceeded 
the  value  of  the  property.  This  note,  before  due,  was  trans- 
ferred to  the  plaintiff,  in  trust  for  the  payment  of  certain  cred- 
itors named,  with  a  balance  j^ayable  to  the  wife  of  Yale,  who  was 
tiien  living  apart  from  her  husband,  and  who  has  since  been 
divorced.  The  creditors  assented  to  the  trust,  and  directed  the 
plaintiff  to  commence  and  prosecute  this  suit.  The  note  is  more 
than  sufficient  to  pay  the  creditors  named,  so  that  if  collected 
there  will  be  a  balance  to  be  paid  to  the  wife.  The  plaintiff  had 
no  knowledge  of  the  fraud,  and  took  the  note  in  good  faith  for 
the  purposes  stated.  There  was  no  consideration  for  the  transfer 
except  the  claims  of  the  creditors.  Whether  the  payee  was  or 
was  not,  at  the  time  of  the  transfer  of  the  note,  insolvent,  does 
not  appear. 

Upon  these  facts  the  superior  court  reudei-ed  judgment  for  the 
plaintiff.  The  court  therefore  must  have  decided  that  the  plain- 
tiff took  the  note  in  good  faith,  for  a  valuable  consideration,  and 
in  the  regular  course  of  business. 

The  case  presents  two  questions: — 

.1.  Is  the  plaintiff  to  be  ri  garded  as  a  trustee  for  the  creditors, 
or  the  agent  of  the  payee?  If  the  latter,  it  is  conceded  that 
the  plaintiff  is  not  entitled  to  recover;  if  the  former,  then  the 
plaintiff  insists  upon  his  right  to  recover  and  the  defendant 
denies  it. 

We  think  the  plaintiff,  to  a  certain  extent,  is  a  trustee  for  the 
creditors.  The  auditor  has  clearly  found  that  the  note  was  trans- 
ferred to  the  plaintiff  in  trust  for  the  creditors  and  Mrs.  Yale, 
and  that  the  creditors  ratified  and  confirmed  the  transfer,  and  that 
the  plaintiff  is  following  their  directions  in  bringing  and  prose- 
cuting this  action. 

In  respect,  however,  to  that  portion  of  the  note  which  was 
payable  to  Mrs.  Yale,  we  are  clearly  of  the  opinion  that  he  was 
the  agent  of  the  payee,  and  was  in  no  sense  a  trustee  for  cred- 
itors. The  ordinary  relations  between  husband  and  wife  will  be 
presumed  to  have  existed  in  this  case  until  the  contrary  appears. 
It  is  only  found  that  they  were  living  apart,  and  have  since  been 
divorced.  No  indebtedness  from  him  to  her  is  found  ;  and,  so 
far  as  appears,  the  money,  as  soon  as  pai<l  to  her,  wouhl  have 
been  subject  to  his  control.  The  legal  effect  of  the  transaction 
then,  so  far  as  it  relates  to  this  question,  is  the  same  that  it  would 
have  been  if  the  balance  had  been  payable  to  him.  To  the  extent 
of  that  balance,  therefore,  the  judgment  is  clearly  erroneous,  and 
it  must  be  reversed. 

2.  Was  this  note  taken  in  the  regular  course  of  business? 

In  the  discussion  of  this  question  we  shall  not  controvert  the 
legal  proposition  that  a  negotiable  note  transferred  before  due  in 

286 


CH,  TX.]  RIGHTS   OF    BONA    FIDK    HOLDERS.  ILL.  CAS. 

the  regular  course  of  business  to  a  creditor,  in  payment  of,  or  as 
security  for,  a  pre-existing  debt,  is  taken  in  good  faith  and  for  a 
valuable  consideration,  and  is  collectible  in  the  hands  of  the  cred- 
itor, notwithstanding  any  equities  existing  as  between  the  original 
parties  thereto.  That  question  has  been  coiTCCtly  settled  in  this 
State,  and  elsewhere,  and  we  have  no  disposition  to  disturb  it. 
Bush  v.  Scribner,  11  Conn.  388;  Bridgeport  City  Bank  ?;.  Welch, 
29  Conn.  479. 

Nor  do  we  i)lace  our  decision  upon  the  ground  that  this  note 
was  obtained  l3y  fraud.  We  suppose  the  general  rule  to  be  that 
fraud  is  not  available  as  a  defense  in  cases  of  this  character. 
To  this  rule,  however,  there  are  exceptions.  Foster  v.  Mackinon, 
Law  Rep.,  4  C.  P.  704  ;  Nance  v.  Lary,  5  Ala.  370. 

But  it  is  not  material  to  our  present  purpose  to  inquire 
whether  this  case  falls  within  tliose  exceptions.  Our  object  is 
rather  to  consider  whether  the  rule  of  law  wOiich  exempts  com- 
mercial paper  from  legal  defenses  applies  to  a  case  like  this. 
We  think  it  is  j^ertinent  to  tliat  inquiry  to  call  attention  to  the 
fact  that  this  note  was  obtained  by  fraud,  and  that  the  contract 
was  not  only  voidable,  but  was  actually  avoided  by  the  maker 
immediately  upon  discovering  the  fraud.  We  need  not  say  that 
it  is  the  duty  of  the  court  to  protect  the  maker,  and  prevent  the 
consummation  of  the  fraud,  if  it  can  l)e  done  consistently  with 
the  rules  of  law. 

The  only  dilficulty  that  we  can  perceive  is,  in  jirescrving 
unimpaired  the  rule  of  law  giving  immunity  to  negotiable  paper 
and  the  principles  upon  which  it  rests.  That  rule  does  not  pro- 
tect paper  which  was  not  taken  in  the  usual  course  of  business. 
That  phrase,  as  Mr.  Parsons  in  his  work  on  "  Notes  and  Bills." 
Vol.  I,  p.  256,  justly  remarks,  is  open  to  some  objection,  for  the 
reason  that  it  does  not  clearly  indicate  what  are  the  legitimate 
uses  of  negotiable  paper.  The  qnestion  is  variously  expressed  in 
the  books:  "  Was  it  in  the  course  of  trade?"  "  Was  it  in  the 
ordinary  and  regular  course  of  business?"  "Was  it  a  trans- 
action which  the  law  views  as  according  to  the  usage  of  mer- 
chants? " 

A  more  definite  idea  of  its  meaning  may  be  had,  however,  by 
stating  the  question  more  specifically.  Is  negotiable  paper  ordi- 
narily used  in  the  way  and  manner  iu  which  this  was  used? 
Would  a  business  man  of  ordinary  intelligence  and  capacity 
receive  commercial  paper,  when  offered  for  the  purposes  for 
which  this  was  transferred,  as  money,  and  upon  its  credit  i>art 
with  his  i>roperty?  Or  would  he  at  once  suspect  the  integrity 
of  the  paper  itself,  and  the  credit  and  standing  of  the  party 
offering  it?  A  correct  answer  to  these  questions  must  settle 
conclusively  the  mercantile  character  of  this  transaction. 

The  fundamental  principle  of  the  law,  applicable  to  negoti- 
able paper,  is  that  it  is  the  representative  of  monev,  and  ma}' 
be  used  in  all  mercantile  transactions  as  its  substitute.  But 
when    used    for    any    purpose    outside   the   usual    and    ordinary 

287 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

course  of  business,  it  ceases  to  carry  with  it  the  privileges  and 
immunities  with  whicli  the  law  clothes  negotiable  paper.  The 
tendency  of  the  law,  in  respect  to  the  legitimate  uses  of  nego- 
tiable paper,  is  thus  referred  to  in  1  Parsons  on  Notes  and  Bills, 
p.  257:  "And  therefore  we  are  disposed  to  believe  that  the  law 
of  this  country  is  tending  toward  the  rule  that  whether  nego- 
tiable paper  is  sold,  or  discounted,  or  indorsed  over  to  pay  a 
new  debt,  or  for  a  new  purchase,  or  to  secure  new  debt,  or 
an  old  debt,  or  to  pay  an  old  debt,  it  becomes  in  each  case  the 
property  of  the  holder,  and  carries  with  it  all  the  pri\ilege3  of 
negotiable  paper,  unless  there  be  something  in  the  particular 
transaction  which  is  equivalent  to  fraud,  actual  or  construc- 
tive." It  will  be  noticed  that  this  language  is  comprehensive, 
and  was  doubtless  intended  to  embrace  every  instance  in  which 
such  paper  may  be  used  and  still  retain  its  privileges.  But  it 
is  not  sufficiently  broad  to  cover  this  case,  as  we  shall  presently 
see. 

The  doctrine  that  commercial  paper  may  be  properly  used  as 
security  for  a  pre-existing  debt  has  been  disputed,  and  there 
are  conflicting  decisions  upon  that  point;  but  it  is  now  pretty 
generally  established.  The  profession,  however,  did  not  readily 
acquiesce  in  the  doctrine,  inasmuch  as  there  is  an  apparent 
hardship  in  allowing  the  holder  of  such  paper,  who  parted 
with  nothing  upon  its  credit,  to  recover  of  one  who,  as  against 
other  parties,  has  a  good  defense.  The  reason  upon  which  this 
doctrine  rests,  and  without  which  the  law  would  undoubtedly 
have  been  determined  otherwise,  is,  that  a  very  considerable 
portion  of  the  negotiable  paper  made  in  business  is  used  in 
this  way.  We  can  easily  understand,  therefore,  that  among 
business  men,  accustomed  to  deal  in  this  kind  of  paper,  the 
receiving  or  offering  it  as  security  for  an  old  debt  is  not  in 
itself  calculated  to  excite  suspicion,  for  the  simple  reason  that 
it  is  according  to  usage ;  and  if  according  to  usage,  presump- 
tively at  least,  such  use  facilitates  trade,  and  should  receive  the 
sanction  of  the  courts  unless  there  is  some  real  and  substantial 
objection  to  it. 

But  in  the  case  before  us  no  such  usage  appears.  On  the 
contrary,  the  purpose  for  which  the  paper  was  used  is  excep- 
tional and  unusual.  We  apprehend  that  cases  like  this  are 
rarely  to  be  met  with  in  business  circles.  Let  us  examine  it 
more  carefully.  A  man  has  a  piece  of  negotiable  paper  with 
which  he  wishes  to  pay  or  secure  certain  debts.  If  there  is  but 
one  debt  he  can  transfer  it  directly  to  the  creditor,  and  the  law 
protects  the  transaction.  That  is  according  to  the  usual  course 
of  business.  But  if  he  transfers  to  a  friend,  to  hold  till  due, 
and  then  collect  it,  and  with  its  avails  pay  the  creditor,  that  is 
unusual  and  suspicious  upon  its  face,  and  requires  explanation. 
Unless  some  good  reason  can  be  shown  for  such  a  proceeding, 
the  law  ought  not  to  protect  it.  But  it  is  said  that  heie  were 
several  creditors,  which,  it  is  claimed,  sufficiently  explains  the 
288 


CH.  IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  ILL.  CAS. 

fact  that  the  security  was  effected  through  the  intervention  of 
a  trustee.  Let  us  test  this  position.  If  the  paper  is  right  and 
free  from  defects,  why  not  sell  it  in  market  or  get  it  discounted, 
and  with  its  avails  pay  the  debts  at  once?  Or,  if  the  debts  are 
not  to  be  paid  until  the  paper  is  due  and  collectc  d,  why  not 
retain  it  in  his  own  hands  until  due,  and  if  necessary  sue  and 
collect  in  his  own  name?  Such  a  course  would  be  natural  and 
usual.  But  what  honest  reason  can  be  suggested  why  it  should 
be  transferred  to  a  third  part}',  who  has  no  interest  in  the  matter, 
to  be  sued  in  his  name?  Such  a  course  is  unusual,  and  not  in  the 
course  of  trade.  The  transaction  at  once  suggests  the  idea  that 
there  is  some  equity  in  favor  of  the  maker  inherent  in  the  note 
itself,  and  which  can  be  made  available  as  against  the  pa^^ee,  and 
which  the  payee  is  seeking  to  avoid. 

But  there  is  another  circumstance  appearing  in  the  case 
which  makes  the  unusual  character  of  the  transaction  still 
more  apparent.  The  creditors  are  informed  of  the  transfer, 
they  ratify  and  confirm  It,  and  direct  the  commencement  and 
prosecution  of  this  suit.  What  occasion  is  there  for  all  this, 
exce[)t  to  make  it  appear  that  the  plaintiff  is  a  trustee  for  the 
creditors?  And  why  is  it  desirable  that  it  should  appear  that 
he  is  a  trustee  for  the  creditors,  unless  for  the  very  purpose  of 
shutting  out  this  defen-e?  If  Yale  was  in  fact  solvent,  this 
proceeding  was  extraordinary  and  inexplicable  upon  any  theory 
consistent  with  honesty  and  fair  deaing.  At  least  no  sufficient 
reason  for  it  appt  ars  in  the  case.  If  he  was  insolvent,  another 
and  insurmountable  difficulty  is  at  once  encountered.  The 
conveyance,  not  being  in  conformity  to  the  provisions  of  our 
insolvent  law,  and  operating  to  pay  the  creditors  named  in 
full,  thereby  giving  them  a  preference,  contravenes  the  policy 
of  that  law,  and  is  therefore  void  as  against  credit'>rs.  Surely 
it  Avill  not  be  contended  that  such  a  couveyance  shcmld  receive 
the  sanction  of  this  court  as  a  legitimate  mercantile  transaction. 

The  fact  that  a  part  of  this  money  was  payable  to  the  wife 
of  Yale  is  worthy  of  notice  also  in  this  branch  of  the  case.  To 
that  extent,  as  we  have  already  seen,  the  plaiutiff  was  the  agent 
of  Yale.  We  have  no  occasion  to  say  that  this  ciicumstance 
alone  renders  this  conveyance  void  at  common  law.  But  if 
there  was  a  secret  trust  in  favor  of  Yale,  and  the  oi)eration  of 
the  conveyance  should  be  to  defraud  creditors,  it  certainly  would 
])e  void  as  against  creditors.  A  fraudulent  conve}  auce  can  in  no 
sense  be  said  to  be  in  the  usual  course  of  business.  But  be  this 
as  it  may,  the  fact  that  Yale  himself  is  still  interested  i.j  this  note, 
either  in  his  own  right  or  in  right  of  his  wife,  should  suggest  to 
all  parties  concerned  an  inquiry  as  to  the  reason  and  occasion  of 
this  conveyance. 

We  are  not  referred  to  any  case  directly  in  point,  and  are  not 
aware  that  any  exists  ;  but  we  believe  the  views  above  expressed 
are  in  harmony  with  reason  and  good  sense,  and  not  in  conflict 
with  any  adjudged   case.     In  Billings  v.  Collins,  44  Maine,  271, 

19      ^  28d 


ILL.   CAS.  RIGHTS    OF    BONA    FIDK    HOLDERS.  [CH.    IX. 

it  was  held  that  the  assignment  of  negotiable  paper,  by  operation 
of  a  bankrupt  or  insolvent  law,  was  not  in  the  regular  course  of 
trade,  and  that  the  assignee  could  only  acquire  the  rights  of  the 
insolvent.  The  opinion  of  the  court  is  brii  f ,  simply  announcing 
the  result  without  adducing  any  argument  in  its  support;  l)ut  we 
have  no  reason  lo  doubt  the  correctness  of  the  decision.  So  far 
as  it  goes  it  supports  our  position  in  tlie  present  case. 

For  these  reasons,  after  careful  consideration,  we  have  come 
to  the  conclusion  that  this  note  was  not  taken  in  the  regular 
course  of  business,  and  that  the  judgment  of  the  court  below 
upon  that  ground  was  erroneous,  and  must  be  reversed. 


Transferee  of   Certified  Check  Payable  to  Order,  Unin- 
dorsed, Takes  Check  Subject  to  all  Defenses. 

Goshen  Nat.  Bank  v.  Bingham,  118  N.  Y.  349  (23  N.  E.  180). 

Appeals  from  judgments  rendered  by  the  general  term  of  the 
supreme  court  of  the  tirst  depariment,  affirming  judgments  entered 
upon  the  reports  of  a  referee. 

On  Novembir  27,  1884,  Benjamin  D.  Brown  applied  to  the 
cashier  of  tlie  Goshen  National  Bank,  at  Goshen,  N.  Y  ,  to  cash 
a  sight-draft  for  $17,000,  drawn  by  him  upon  the  fimi  of  William 
Bingham  &  Co.,  of  New  York,  accompanied  by  a  quantity  of  the 
bonds  of  tlie  West  Point  Manufacturing  Company,  of  the  face 
value  of  $17,000.  Brown  represented  that  he  had  negotiated  a 
sale  of  these  bonds  at  their  face  value  with  William  Bingham  & 
Co.  ;  that  they  had  diiected  him  to  draw  upon  them  at  sight  for 
$17,000,  the.  draft  to  be  accompanied  by  the  bonds,  and  that  the 
draft  would  be  paid  upon  presentation.  Such  representations 
were  absolutely  false.  The  bonds  had  no  market  value.  Brown 
was  a  bankrupt,  and  had  no  funds  in  the  bank,  except  such  as 
resulted  from  the  credit  given  him  upon  the  failh  of  the  draft  on 
Bingliam  &  Co.,  accompanied  by  the  bonds.  The  cashier  of  the 
Goshen  Nationtd  Bank,  relying  upon  such  representations,  cashed 
the  draft  of  $17,000,  and  placed  the  proceeds  to  the  credit  of 
Brown,  upon  the  books  of  the  bank.  He  gave  Brown  sight- 
drafts  on  New  York  for  $12,000,  and  certified  a  chtck  drawn  by 
Brown  to  lis  own  oider,  dated  November  26,  1884,  for  $5,000. 
On  ti.e  morning  of  November  28th,  Brown  called  at  the  office  of 
William  Bingham  &  Co.,  and  stated  that  he  wanted  to  get  some 
currency.  Mr.  Bingham  passed  tiie  check  to  the  firm's  cashier, 
directing  him  to  give  Brown  currency  f-ir  the  amount.  The 
cashier  gave  him  a  check  drawn  on  the  Corn  Exchange  Bank  for 
$5,000.  Brown  had  the  check  cas^hcd  at  the  Corn  Exchange 
Bank.  He  also  had  the  New  Y'ork  drafts  cashed,  amounting  to 
$12,000,  which  he  had  obtained  from  the  Go  hen  National  Bank. 
After  procuring  the  checks  and  drafts  to  be  cashed,  he  fled  to 
Canada,  where  he  remained  at  the  time  of  the  tri:il  of  these 
actions.     Wlien  Bingham  &  Co.  took  from  Brown  the  check  cer- 

290 


CH.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  ILL.   CAS. 

tifird  by  the  Goshen  National  Bank,  it  was  not  indorsed.  The 
referee  found  that,  "  at  the  time  of  the  transfer  of  the  said  cer- 
tified check  by  Brown  to  the  plaintiffs,  it  was  intended  botli  by 
Brown  and  the  plaintiffs  tliat  said  certified  check  should  be 
indorsed  by  Brown,  and  it  was  supposed  by  both  parties  that  he 
had  so  indorsed  it;  and,  if  the  plaintiffs  had  known  that  it  was 
not  indorsed,  they  would  not  have  paid  the  consideration  there- 
for." He  further  found  "  tliat  Brown  raade  no  statement 
to  the  defendants,  or  either  of  them,  at  the  time  of  the  transfer 
of  the  check,  *  «  *  tiiat  such  check  was  indorsed;" 
and,  "prior  to  the- commencement  of  the  action  of  replevin, 
the  defendants  never  requested  Brown  to  indorse  said  check." 
While  Bingliara  &  Co.  held  the  check  in  question  unindorsed, 
a  demand  for  its  return  to  tlie  bank,  accompanied  by  a  full  ex- 
planation of  the  circumstances  under  whi'.h  the  certification  was 
obtained,  was  made  upon  Bingham  &  Co.  in  behalf  of  the  bank ; 
and,  upon  their  refusal  to  return  it,  an  action  to  recover  its  pos- 
session was  commenced  by  the  bunk  against  Bingham  &  Co. 
That  action  is  firstly  above  entitled.  Subsequently,  and  on  De- 
cember IGth,  Bingham  &  Co.  obtained  from  Brown  a  power  of 
attorney  to  indorse  the  check.  Pursuant  thereto,  the  check  was 
indorsed,  and  jjayment  thereafter  demanded  of  the  bank.  This 
was  refused,  and  thereupon  the  action  secondly  above  entitled 
was  commenced  by  Bingham  &  Co.  to  recover  the  amount  of  the 
check. 

Pa  kker,  J.  {after  statinr/  the  facts  as  above").  As  against  Brown, 
to  whose  order  the  check  was  payable,  the  bank  had  a  good  de- 
fense. But  it  could  not  defeat  a  recovery  by  a  bona  fide  holder, 
to  whom  the  check  had  been  indorsed  for  value.  By  an  oversight 
on  the  part  of  both  Brown  and  Bingham  &  Co.,  the  check  was 
accepted  and  cashed  without  the  indorsement  of  the  payee. 
Before  the  authority  to  indorse  the  name  of  the  pa3'ee  upon  the 
check  was  procured,  and  its  subsequent  indorsement  thereon, 
Bingham  &  Co.  had  notice  of  the  fraud,  which  constituted 
a  defense  for  the  bank  as  against  Brown.  Can  the  recov- 
ery had  be  sustained?  It  is  too  well  settled  by  authority, 
both  in  England  and  in  this  country,  to  permit  of  question- 
ing, that  the  purchaser  of  a  draft  of  check  who  obtains  title 
without  an  indorsement  by  the  paj^ee  holds  it  subject  to  all 
equities  and  defenses  existing  between  the  original  parties,  even 
though  he  has  paid  fall  consideration,  without  notice  of  the  exist- 
ence of  snch  equities  and  defenses.  Harrop  v.  Fisher,  30  Law 
J.  C.  P.  283;  Whistler  r.  Fors'cr,  U  C.  B.  (\.  s.)  218;  Savage 
V.  King,  17  Me.  301  ;  Clark  v.  Callison,  7  111.  A\^\^.  203;  Hask>  1! 
V.  Mirchell,  03  Me.  4G8 ;  C'ark  v.  Whituker,  50  N.  H.  474 ; 
Calder -u.  Billington,  15  Me.  3!)8  ;  Bank  v.  Taylor,  100  ISIass.  18; 
Gilbert -y.  Sliarp,  2  Lans.  412;  Hedges  v.  Sealy,  9  Barb.  214- 
218;  Bank  v.  R:»ymon(l,  3  Wend.  G'.> ;  Raynor\'.  Iloagland,  39 
N.  Y.  Super.  Ct.  11  ;  Mullcr  v.  Pondir,  55  N.  Y.  325  ;  Freundv. 
Bank,  90  N.  Y.  352;  Trust  Co.  v.  Bank,  101  U.  S.  68;  Osgood 

291 


ILL.  CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.  IX. 

V.  Artt,  17  Fed.  Rep.  575.  The  reasoning  on  which  this  doctrine 
is  founded,  may  be  briefly  stated  as  follows :  The  general  rule  is 
that  no  one  can  transfer  a  better  title  than  he  possesses.  An  ex- 
ception arises  out  of  the  rule  of  tlie  law- merchant  as  to  negotiable 
instruments.  It  is  founded  on  the  commercial  policy  of  sustaining 
the  credit  of  commercial  paper.  Being  treated  as  currency  in 
commercial  transactions,  such  instruments  are  subject  to  the 
same  rule  as  money.  If  transferred  by  indorsement,  for  value, 
in  good  faith  and  before  maturity,  they  become  available  in  the 
hands  of  the  holder,  notwithstanding  the  existence  of  equities  and 
defenses  which  would  have  rendered  them  unavailable  in  the 
hands  of  a  prior  holder.  This  rule  is  only  applicable  to  negoti- 
able instruments  which  are  negotiable  according  to  the  law- 
merchant.  When,  as  in  this  case,  such  an  instrument,  is 
transferred,  but  without  an  indorsement,  it  is  treated  as  a  chose 
in  action  assigned  to  the  purchaser.  The  assignee  acquires  all 
the  title  of  the  assignor,  and  may  maintain  an  action  thereon  in 
his  own  name  ;  and,  like  other  choses  in  action,  it  is  subject  to  all 
the  equities  and  defenses  existing  in  favor  of  the  maker  or  accep- 
tor against  the  previous  holder.  Prior  to  the  indorsement  of  this 
check,  therefore,  Bingham  &  Co.  were  subject  to  the  defense 
existing  in  favor  of  the  bank  as  against  Brown  and  the  payee. 
Evidence  of  an  intention  on  the  part  of  the  transferee  to  indorse 
does  not  aid  the  plaintiff.  It  is  the  act  of  indorsement,  not  the 
intention,  which  negotiates  the  instrument;  and  it  cannot  be  said 
that  the  intent  constitutes  the  act. 

The  effect  of  the  indorsement  made  after  notice  to  Bingham  & 
Co.  of  the  bank's  defense  must  now  be  considered.  Did  it  relate 
back  to  the  time  of  the  transfer,  so  as  to  constitute  the  plaintiffs 
holders  by  indorsement  as  of  that  time?  While  the  referee  finds 
that  it  was  intended  both  by  Brown  and  the  plaintiffs  that  the 
check  should  be  indorsed,  and  it  was  supposed  that  he  had  so  in- 
dorsed it,  he  also  finds  that  Brown  made  no  statement  to  the 
effect  that  the  check  was  indorsed  ;  neither  did  the  defendants 
request  Brown  to  indorse  it.  There  was  therefore  no  agreement 
to  indoi'se.  Nothing  whatever  was  said  upon  the  subject. 
Before  Brown  did  agree  to  indorse,  the  plaintiffs  had  notice  of  the 
bank's  defense.  Indeed,  it  had  commenced  an  action  to  recover 
possession  of  the  check.  It  would  seem,  therefore,  that,  having 
taken  title  by  assignment, —  for  such  was  the  legal  effect  of  the 
transaction,  by  reason  of  which  the  defense  of  the  bank  against 
Brown  became  effectual  as  a  defense  against  a  recovery  on  the 
check  in  the  hands  of  the  plaintiffs  as  well, —  Brown  and  Bing- 
ham &  Co.  could  not  by  any  subsequent  agreement  or  act  so 
change  the  legal  character  of  the  transfer  as  to  affect  the  equities 
and  rights  which  had  accrued  to  the  bank  ;  that  the  subsequent 
act  of  indorsement  could  not  relate  back  so  as  to  destroy  the 
intervening  rights  and  remedies  of  a  third  party.  This  position 
is  supported  by  authority.  Harrop  v.  Fisher,  Whistler  v.  Forster, 
Savage  v.  King,  Haskell  v.  Mitchell,  Clark  v.  Whitaker,  Clark  v. 

292 


CH.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  ILL.   CAS. 

Callison,  Bank  v.  Taylor,  Gilbert  r.  Sliarp,  cited  supra.  Watkins 
V.  Maule,  2  Jac.  &  W.  243,  and  Hughes  i-.  Nelson,  29  N.  J.  Eq. 
547,  are  cited  by  the  plaintiff  in  opposition  to  the  view  we  have 
expressed.  In  Watkins  v.  Maule  the  holder  of  a  note  obtained 
without  indorsement  collected  it  from  the  makers.  Subsequently 
the  makers  complained  that  the  note  was  only  given  as  a  guaranty 
to  the  payee,  who  bad  become  bankrupt.  Thereupon  the  holder 
refunded  the  money  and  took  up  the  note,  upon  the  express 
agreement  that  the  makers  would  pa}'  any  amount  which  the 
holders  should  fail  to  make  out  of  the  bankrupt  payee's 
propert}'.  The  makers  were  held  liable  for  deficiency. 
Hughes  V.  Nelson  did  not  involve  the  precise  question  here 
presented.  Ihe  views  expressed,  however,  are  in  con- 
flict with  some  of  the  cases  cited ;  but  we  regard  it,  in  such 
respects,  as  against  the  weight  of  authority.  Freund  v.  Bauk, 
supra,  docs  nut  aid  the  plaintiff.  In  that  case  it  was  held  that 
the  certiflcation  by  the  bank  of  a  check  in  the  hands  of  a  holder 
who  had  purchaseil  it  for  value  from  the  payee,  but  which  had  not 
been  indorsed  by  him,  rendeied  the  bank  Jiable  to  such  holder  for 
the  amount  thereof.  By  accepting  the  check  the  bank  took,  as  it 
had  the  right  to  do,  the  risk  of  the  title  which  the  holder  claimed 
to  have  acquired  from  the  payee.  In  such  case  the  bank  eiiters 
into  contract  with  the  holder  by  which  it  accepts  the  check  and 
promises  to  pay  it  to  the  holder,  notwithstanding  it  lacks  tiie  in- 
dorsement provided  for ;  and  it  was  accordingly  held  that  it  was 
liable  upon  such  acceptance,  upon  the  same  principles  that  con- 
trol the  liabilities  of  other  acceptors  of  commercial  paper.  Lynch 
V.  Bank,  107  N.  Y.  183;   13  N.  E.  Kep.  775. 

But  one  question  remains.  The  learned  referee  held,  and  in 
that  respect  he  was  sustained  by  the  general  term,  that  the  bank, 
by  its  certitication,  represented  to  every  one  that  Brown  had  on 
deposit  with  it  §5,000  ;  that  such  amount  had  been  set  apart  for 
the  satisfaction  of  the  check,  and  that  it  should  be  so  applied 
whenever  the  check  should  be  presented  for  payment;  and  that, 
Bingham  &  Co.,  having  acted  upon  the  faith  of  these  representa- 
tions, and  having  patted  with  85,000  on  the  stiength  thereof, 
the  bank  is  estopped  from  asserting  its  defense.  'Ihe  referee 
omitted  an  importnnt  feaiure  of  the  contract  of  certificalion. 
The  bank  did  certify  that  it  had  the  money,  would  retain  it,  and 
apply  it  in  paynient,  provided  the  cheek  should  be  indorsed  b}' 
the  payee.  Lynch  v.  Bank,  supra.  If  the  check  had  been  trans- 
ferred to  plaintiffs  by  indorsement,  the  defendantwould  have  had 
no  defense,  not  because  of  the  docirine  of  estopiiel,  but  upon  prin- 
ciples especially  applicable  to  negotiable  instrumenls.  Bank  v. 
Kailroad  Co.,  13  N  Y.  638.  Jf  the  maker  or  acceptor  could 
ever  be  held  to  l)e  estopped  by  reason  of  representations  con- 
tained in  a  negotiable  insirumcnt,  he  certainly  could  not  be  in  the 
absence  of  a  compliance  with  the  provisions  upon  which  he  had 
representid  that  his  liability  should  depcLd.  But  it  is  well 
settled  that  the  maker  or  acceptor  of  a  negotiable  instrument  is 

2il3 


ILL.  CAS.  KIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

not  estopped  from  contesting  its  validity  because  of  representa- 
tions contained  in  tlie  instrument.  In  such  cases  an  estoppel 
can  only  be  founded  upon  some  separate  and  distinct  writing  or 
statement.  Clark  v.  Sisson,  22  N.  Y.  312  ;  Bush  v.  Lathrop,  Id. 
535  ;  Moore  v.  Bank,  55  N.  Y.  41  ;  Fairbanks  v.  Sargent,  104  N. 
Y.  108  ;  9  N.  E.  Rep.  870 ;  Bank  v.  Railroad  Co.,  supra. 

The  views  expressed  especially  relate  to  the  action  of  Bingham 
&  Co.  against  the  bank,  aud  call  for  a  reversal  of  the  judgment. 
We  are  of  the  opinion  tliat  the  action  brought  by  the  bank  against 
Bingham  &  Co.  to  recover  possession  of  the  check  cannot  be 
maintained,  and  in  that  case  the  judgment  should  be  affirmed. 
All  concur,  except  Haight,  J.,  not  sitting. 


Rights  of  an  Indorsee  after  Maturity. 

Watsou  V.  Alley,  141  111.  284  (31  N.  E.  419). 

ScHOLFiELD,  J.  The  controversy  here  is  whether  certain  prom- 
issory notes  purporting  to  be  executed  by  the  Superior  Nickel 
Works,  a  corporation,  to  Louis  Ellickson,  and  by  him  assigned 
before  maturity  to  A.  T.  Bliss,  and  by  Bliss  assigned  after  matur- 
rity  to  Winfield  N.  Alley,  aie  legal  charges  against  the  assets  of 
the  corporation  in  the  hands  of  its  receiver.  The  lower  courts 
adjudged  that  they  were,  and  decreed  their  payment  by  the 
receiver.  Appellants  contend  that  they  are  not,  because  the 
president  and  secretary  of  the  corporation,  who  assumed  to 
execute  the  notes,  had  no  authority  to  thereby  bind  the  corpora- 
tion, and  because,  also,  they  were  executed  witliout  any  valid 
consideration,  and  Alley,  being  an  assignee  after  maturity',  took 
the  notes  subject  to  those  defenses.  Ihe  notes  purport  to  con- 
tain each  a  power  of  attorney  to  confess  judgment  for  the  amount 
due  thereon  ;  but,  since  tlaere  is  no  attempt  to  do  any  act  under 
and  by  virtue  of  thtse  powers,  it  is  unnecessary  to  consider  that 
feature  of  the  notes.  It  is  iv  t  denied  that  not*,  s  may  be  executed 
lawfully  by  the  president  and  secretary  of  a  cor[)oration,  when 
they  were  executed  in  good  faith  to  secure  indebtedness  of  the 
corporation,  lawfully  incurred  in  the  course  of  its  business,  and 
we  are  therefore  under  no  necessity  to  cie  authorities  to  show 
that  this  is  the  law ;  and,  although  Alley  is  an  assignee  after 
maturity,  his  assignor,  Bliss,  was  an  assignee  before  maturity, 
and  Alley  is  entitled  to  stand  in  the  place  of  Bliss,  and  no  defense 
can  be  urged  by  the  corporation,  as  against  Alley,  which  it  could 
not  have  urged  against  Bliss,  had  he  remained  the  owner  of  the 
notes,  and  sought  to  enforce  the  r  collection.  Woodworth  v. 
Huntoon,  40  111.  131.  See,  also,  Rand.  Com.  Paper,  §  673,  and 
authorities  cited  in  note. 

It  only  remains,  then,  to  determine  whether  the  defenses  here 
urged  would  be  good  as  agninst  the  rights  of  Bliss,  were  he,  in- 
stead of  Alley,  attempting  to  enforce  payment  of  these  notes  in 
this  proceeding.  In  Comstock  v.  Hannah,  76  111.  535,  we  cited 
294 


CH.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  ILL.   CAS. 

with  approval  the  following:  "The  party  who  takes  it  [com- 
mercial paper]  before  due,  for  a  valuable  cousideration,  without 
knowledge  of  any  defects  of  title,  and  in  good  fnith,  holds  it  by  a 
title  valid  against  the  world.  Suspicion  of  defect  of  title,  or  the 
knowledge  cf  circmnstanccs  which  would  exciie  such  suspicion  in 
the  mind  of  a  prudent  man,  or  gross  negligence  on  the  part  of  the 
taker,  at  the  time  of  tlie  transfer,  will  not  defeat  his  title.  That 
result  can  only  be  produced  by  bad  faith  on  his  part.  The  bur- 
den of  proof  lies  on  the  person  who  assails  the  right  claimed  by 
the  l^arty  in  possession."  We  followed  this  ruling  in  Shreeves  v. 
Allen,  79  J 11.  553,  and  INIurray  v.  Beckwith,  81  111.  4.3.  The  evi- 
dence here  fails  to  show  l)ad  faith  in  Bliss  in  olitaining  the  assign- 
ment of  these  notes,  but  ex[)ressly  proves  the  contrary.  The 
utmost  that  can  be  said  in  that  respect  is  that  he  might  by  inquiry 
have  ascertained  the  consideration  for  which  the  notes  were  given. 
But  this  only  ])roves  that,  in  failing  to  make  such  inquiry,  he  was 
negligent,  and,  under  what  is  quoted  supra,  is  insufficient  to  affect 
him  witli  notice.  The  only  evidence  upon  the  question  is  the 
testimony  of  Bliss  himself.  He  testified  that  he  received  the 
notes  from  Ellickson,  "  two  or  three  days  or  a  week  after  their 
execution,"  in  payment  for  indebtedness  by  P^llickson  to  himself 
for  professional  services  as  an  attorney  at  law;  that  he  did  not 
know  that  the  notes  were  in  existence  until  Ellickson  gave  them 
to  him  ;  and  that  he  subsequently  gave  the  notes  to  Alley  in  pay- 
ment of  a  debt  which  he  owed  Alley.  He  admits  that  he  had 
been  acting  for  the  corporation  and  P>llickson,  as  their  attorney  at 
law,  since  the  beginning  ('f  this  suit,  and  that  he  did  some  work 
for  them  in  that  cajjacitv  lu-fore  that  time.  There  is  not  a  par- 
ticle of  evidt  nee  in  ihe  abstract  that  he  had  actual  knowledge  of 
the  consideration  of  these  notes,  or  the  circumstances  under 
which  they  were  execiite/1,  at  the  time  they  were  assigned  to  him  ; 
and  we  cannot  infer  that  he  had  such  knowledge  merely  because 
he  may  have  had  an  opportunity,  by  the  exercise  of  diligence,  to 
have  obtained  it.  We  find  no  error  in  the  judgment  of  the 
appellate  court.     It  is  therefore  affirmed. 


Pledgee    as    an    Indorsee  and  Bona  Fide  Holder  —  His 
Riglits  and  Oblijjations. 

Handy  v.  Sibley,  40  Ohio  St.  329  (17  N.  E.  329). 

Error  to  circuit  court,  Hamilton  county. 

The  original  action  was  commenced  in  the  court  of  common 
pleas  of  Hamilton  county  by  the  defendant  in  error,  James  W. 
Sibley,  against  Helen  A.  Handy,  Mariettc  B.  H;\ndy,  Charles  E. 
Handy,  Jennie  A.  Handy  (now  Jennie  A.  Rhodes),  Anna  W. 
Handy,  and  P^ugene  F.  Williams,  i)laintiffs  in  error,  and  Truman 
B.  Handy,  t )  foreclose  a  mortgage  as  hereinafter  set  forth.  On 
March  27,  1883,  Helen  A.  Handy,  Mariette  B.  Handy,  Charles 
E.  Handy,  Jennie  A.   Handy,  and  Anna  W.  Handy,  children  of 

295 


ILL.  CAS.  RIGHTS    OF   BONA   FIDE    HOLDERS.  [CH.  IX. 

Truman   B.  Handy,  executed  and  delivered  to  their  father  their 
promissory  note,  a  copy  of  which  is  as  follows :  — 

"  $25,000.00.  Cincinnati,  March  27,  1883. 

Ninety  days  after  date  we  promise  to  pay  to  the  order  of  Tru- 
man B.  Handy,  twenty-five  thousand  ($25,000)  dollars,  payable 
at  the  Citizens'  National  Bank  at  Cincinnati,  with  interest  at  6 
per  cent  per  annum.     Value  received. 

Helen  A.  Handy.  Jennie  A.  Handy. 

"  Mariette  B.  Handy.  Anna  W.  Handy." 

"  Chas.  E.  Handy. 
Indorsed:   "  Truman  B.  Handy." 

This  note  was  secui'ed  by  a  mortgage  deed  executed  and  ac- 
knowledged March  27,  1883,  by  the  above-named  makers  of  the 
note,  conveying  to  Truman  B.  Handy  certain  described  real  estate 
owned  by  the  mortgagors,  and  situated  in  the  village  of  Clifton, 
in  Hamilton  count}'.  The  note  and  mortgage  were  executed  to 
Truman  B.  Handy  by  his  children,  for  his  accommodation,  and 
simply  as  sui'ety  for  him,  and  to  enable  him  to  pledge  the  same 
as  collateral,  or,  by  having  the  same  discounted,  to  obtain  money 
for  his  convenience  and  accommodation,  and  for  no  other  consid- 
eration. At  the  time  of  executing  the  mortgage  the  real  estate 
therein  described  was  unincumbered,  and  worth  $100,000.  On 
April  2,  1883,  Truman  B.  Handy  executed  and  delivered  to  James 
W.  Sibley  his  promissory  note  and  agreement,  a  copy  of  which  is 
as  follows:  — 

"$15,000.00.  Cincinnati,  Ohio,  April  2,  1883. 

"  Ninety  days  after  date  I  promise  to  pay  James  W.  Sibley,  or 
order,  fifteen  thousand  dollars,  for  value  received  ;  having  depos- 
ited or  jjledged  as  collateral  security  for  the  payment  of  this  note 
a  note  for  twenty-five  thousand  dollars,  secured  by  mortgage 
given  me  by  Helen  A.  Handy,  Mariette  B.  Handy,  Chas.  E. 
Handy,  Jennie  A.  Handy,  and  Anna  W.  Handy.  And  I  hereby 
give  to  the  holder  there  of  full  power  and  authority  to  sell  or  collect 
at  my  expense  all  or  any  part  or  portion  thereof,  at  any  place,  either 
in  the  city  of  Cincinnati  or  elsewhere,  at  public  or  private  sale,  at 
his  option,  on  the  non-performance  of  the  above  promise,  and  at 
au}'^  time  thereafter,  and  without  advertising  the  same  or  other- 
wise giving  to  me  any  notice.  In  case  of  public  sale  the  holder 
may  purchase  without  being  liable  to  account  for  more  than  the 
net  proceeds  of  such  sale.  Truman  B.  Handy." 

Indorsed:   "James  W.Sibley." 

Truman  B.  Handy  indorsed  the  note  for  $25,000,  and  duly 
assigned  the  mortgage  securing  the  same  to  James  W.  Sibley, 
and  deposited  them  witii  him,  for  the  purpose  and  with  the  power 
and  authority  set  forth  in  the  above  note  and  agreement  of  April 
2,  1883.  On  June  9,  1883,  Truman  B.  Handy  and  his  children 
executed  and  delivered  to  Eugene  F.  Williams  an  assignment,  of 
which  James  W.  Sibley  had  notice,  and  to  which  he  assented  in 

296 


CH.  IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  ILL.   CAS. 

certain  terms ;  a  copy  of  which  assignment  and  assent  is  as  fol- 
lows :  — 

"Know  all  men  that  whereas,  Helen  A.,  Mariette  B.,  Charles 
E.,  Jennie  A.,  and  Anna  W.  Handy,  did  on  the  27th  day  of 
March,  1883,  execute  and  deliver  to  Truman  B.  Handy  their  cer- 
tain promissory  note  for  twenty-five  thousand  dollars  ($25,000.00), 
and  on  the  same  day  executed  a  mortgage  to  secure  the  same, 
pa}' able  ninety  (90)  days  after  the  date  tliereof,  with  six  (G)  per 
cent  interest  upon  certain  real  estate  situated  in  Clifton,  Hamil- 
ton county,  Ohio,  and  being  the  same  premises  described  in  a 
mortgage  executed  by  said  Helen  A.  Handy  and  others  to  said 
Truman  B.  Handy,  recorded  in  mortgage  book  461,  page  170, 
Hamilton  county,  Ohio,  mortgage  records ;  and  whereas,  said 
note  and  the  mortgage  securing  the  same  were  for  a  valuable 
consideration  assigned  and  transferred  by  said  Truman  B.  Handy 
to  one  J.  W.  Sibley  to  secure  the  sum  of  $15,000.00  and  interest; 
and  whereas,  the  said  Truman  B.  Handy  is  indebted  to  one 
Eugene  F.  Will'ams  in  something  over  ten  thousand  dol- 
lars ($10,000.00),  and  being  desirous  of  securing  the 
same:  Now,  therefore,  we  do  hereby  agree  and  consent 
that  the  said  Eugene  F.  Williams  shall  receive  an  assign- 
ment and  transftr  of  ten  thousand  dollars  of,  in,  and  to 
said  note  and  morlgnge  of  $25,000.00,  together  with  the  interest 
tliereon,  the  same  bemg  the  surplus  over  and  above  tbe  $15,000.00 
due  said  Sibley,  and  the  interest  due  him  under  said  note  and 
mortgage,  and  that  said  surplus  of  $40,000.00  and  the  interest 
accruing  thereon,  secured  by  said  note  and  mortgage,  shall  be 
applied  towards  the  paj'ment  of  said  indebtedness  by  said  'I'ruman 
B.  Handy  to  said  Williams,  the  said  Williams,  however,  agreeing 
to  extend  the  payment  of  his  claim  secured  by  this  assignment 
for  one  year  from  the  date  hereof,  and  also  agreeing  to  a[)ply  to 
the  diminuti<'n  of  said  in(lel)tedness  all  dividends  that  he  may 
receive  from  the  late  lirm  of  Handy,  Richardson  &  Compan}-,  of 
Chicago;  interist  to  be  allowed  to  the  said  Williams  at  the  rate 
of  6  per  cent  per  aiunim  until  the  paynicnt  of  the  indebtedness 
hereby  secured.  Said  Truman  B.  Handy  hereb}'  so  assigns  said 
note  and  mortgage,  and  joins  in  this  agreement. 

"  TuL  MAN  B.  IIanuy.         Jknnik  a.  Hanuy. 

"  Hklkn  a.  Handy.  Anna  W.  Handy. 

"  Makiettic  B.  Handy.      Ei;genk  F.  Williams. 

"  Chaulls  K.  Handy.  By  Jordan,  Joudan  &  Williams, 

His  Attorneys. 

"I  do  hereby  acknowledge  the  service  upon  me  of  notice  of 
the  above  and  foregoing  assignment  made  by  Truman  B.  Handy 
and  others  to  Eugene  F.  Williams,  dated  June  i>,  1S.S3,  and  agree 
hereby  to  hold  said  note  and  mortgage,  and  deliver  the  same  to 
said  Williams,  or  his  attorneys,  Jordan,  Jordan  t<;  Williams,  or 
his  legal  representatives,  upon  the  payment  to  me  of  fifteen  thou- 
sand dollars,  and  interest  thereon  at  6  per  cent  from  March  27, 
1883,  whether  said  $15,000.00  and  interest  be  paid  by  said  Tru- 

297 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.    IX. 

man  B.  Handy  or  any  other  person.  1  sign  the  above  with  the 
agreement  and  understanding  that  nothing  therein  contained 
shall  prevent  me  from  enforcing  my  security  at  any  time,  or  shall 
hold  me  responsible,  in  case  other  persons  assert  and  maiutaia 
legal  rights  against  said  note  or  the  proceeds  thereof,  or  any  part 
thereof.  James  W.  Sibley." 

The  note  for  Si 5, 000  being  past  due  and  unpaid,  James  W. 
Sibley  caused  the  note  and  mortgage  for  S25,U00,  pledged  as 
collateral  security  for  the  payment  thereof,  to  be  offered  at  public 
auction  sale,  on  July  21,  1883,  at  the  chamber  of  commerce  hall  in 
Cincinnati,  Ohio,  and  Sibley,  being  the  highest  and  best  bidder, 
purchased  the  note  and  mortgage  of  $25,000  for  the  sum  of  $15,- 
000.  The  sale  was  made  without  the  consent  of  the  children  of 
Truman  B.  Hand}^  none  of  wh  jm  had  any  notice  or  knowledge 
of  the  existence  or  ter:ns  of  the  power  of  attorney  under  which 
Sibley  sold  the  pledged  collaterals,  until  long  after  the  sale  ;  nor 
did  they  have  any  notice  of  the  time  or  place  of  such  sale,  nor  did 
they  learn  of  such  sale,  until  long  after  it  was  made.  Notice  of 
the  sale  of  the  pledge  at  "the  chamber  of  commerce  was  given  to 
the  attorney's  of  Eugene  F.  Williams,  but  not  to  him  personally' ; 
and  before  the  sale  the  atlornej^s  of  Williams  informed  Sibley  by 
letter  that  they  had  not  notified  their  client  of  the  notice  si'rved 
upon  them  of  the  intended  sale,  and  that  therefore  he  had  no 
knowledge  of  Sibley's  purpose  to  offer  the  pledge  for  sale.  The 
condition  of  the  mortgage  deed  having  been  broken  by  reason  of 
the  non-payment  at  maturit}^  of  the  note  for  $25,000,  James  W. 
Sibley  filed  his  petition  in  the  court  of  common  pleas  to  foreclose 
the  equity  of  redemption,  and  prayed  that  the  premises  described 
in  the  mortgage  be  sold,  and  that  of  the  proceeds  of  such  sale 
there  be  paid  to  him  the  amount  due  on  the  mortgage  note,  to  wit : 
$25,000,  with  interest  from  March  27,  1883.  Eugene  F.  Will- 
iams, who  was  made  defendant  in  the  foreclosure  proceedings, 
claims  in  his  answer  that  Sibley  is  entitled  to  receive  out  of  the 
proceeds  of  the  sale  of  the  premises,  as  against  him,  the  sum  of 
$15,000,  with  interest,  and  no  more.  On  appeal,  the  circuit 
court,  upon  an  agreed  statement  of  facts,  which  hereinbefore 
have  been  substantially  set  forth,  adjudged  and  decreed  the 
equities  of  the  case  to  be  with  vSibley  ;  that  the  note  for  $25,000 
set  forth  in  the  petition,  and  the  mortgage  securing  the  same, 
belonged  to  Sibley ;  that  he  was  entitled  to  a  decree  against  the 
defendants  for  the  full  amount  thereof,  with  interest;  and  that 
on  failure  to  pay  Sibley  $27,802,  and  costs  of  suit,  the  mortgaged 
premises  should  be  sold,  and  the  last-named  sum  be  paid  from 
the  proceeds  of  such  sale.  To  reverse  the  judgment  of  the 
circuit  court,  this  petition  in  error  is  now  prosecuted. 

DiCKMAN,  J.  {after  stating  the  facts  as  above).  Independent  of 
the  power  of  sale  vested  in  James  W.  Sibley,  by  the  instrument 
of  writing  dated  April  2,  1883,  he  would  not  have  been  author- 
ized to  sell  at  public  or  private  sale  the  note  and  mortgage  of 
$25,000,    which   Truman   B.  Handy  had   pledged   as    collateral 

298 


CII.   IX.]  RIGHTS    OF    BONA    FIDE    HOLDERS.  ILL.   CAS. 

security  for  the  payment  of  his  note  of  $15,000.  There  is  a  dis- 
tinction between  a  pledge  of  ordinary  chattels  and  a  pledge  of 
commercial  paper.  A  pledge  of  the  latter  as  collateral  security 
for  the  payment  of  a  debt  does  not,  in  the  absence  of  a  special 
power  for  that  purpose,  authorize  the  pledg.-e  to  sell  the  securi- 
ties so  pledged  upon  default  of  payment,  either  at  public  or  jiri- 
vate  sale.  He  is  bound  to  hold  and  collect  the  same  as  they 
become  due,  and  apply  the  net  proceeds  to  the  payment  of  the 
debt  so  secured.  The  reason  assigm  d  for  this  exception  to  the 
general  rule  in  relation  to  tlie  sale  of  property  pledged  is  tliat 
such  securities,  not  being  usually  marketable  at  their  fair  value, 
would  generally  be  sold  at  asicrifice,  and  injustice  would  Ihus 
be  done  the  debtor  ;  ami  it  cannot  be  presumed  it  was  the  inten- 
tion of  the  parties  thus  to  denl  with  the  securities.  Wheeler  v. 
Newbould,  16  N.  Y.  31)2;  Fletcher  v.  Dickinson,  7  Allen,  23  ; 
Nelson  v.  Wellington,  5  Bosw.  178;  Brown  v.  Ward,  3  Duer, 
660;  Banking  Co.  v.  Lewis,  12  N.  J.  Eq.  323;  Steel  Co.  v. 
Brick  Co.,  82  111.  548;  Z  mpleman  v.  Veeder,  98  111.  613. 
Ordinarily,  where  there  is  a  deposit  of  personal  property 
as  security,  there  is  an  implixl  power  of  sale  upon  default, 
upon  giving  reasonable  notice  to  the  debtor  to  redeem.  But  the 
pledgee  of  negotial)le  paper,  who  desires  a  more  summary  and 
si)ee(ly  m  ans  of  obtaining  mone}'-  from  his  security  than  hy  col- 
lecting the  same  when  it  f:ill3  due,  or  hy  a  bill  in  clmncery  and  a 
judicial  sale  under  a  regular  decree  of  foreclosure,  will  obtain  a 
special  posver  of  sale  from  tlie  pkdgeor.  In  enforcing  his  rights, 
however,  l-y  a  sale  of  the  pledge,  he  will  be  held  to  tlie  strictest 
good  f.iih  in  the  execution  of  the  power  f  r  the  protection  of  the 
rights  of  the  plt'dgeor,  and  will  be  charged  with  a  trust  for  the 
benelit  of  the  dehtnr,  and  the  benefit  of  those  to  whoiu  the 
debtor  may  have  assigned  his  inter*  st.  It  seems  to  be  beyond 
controversy  th  it  the  note  for  825,000,  secured  by  mortgage,  and 
givi  n  by  the  children  of  Truman  B.  Handy  to  their  father,  was 
gooil  for  that  am(Kuit,  although  purchased  by  Sibley  at  the  sale 
for  $15,000  only,  that  l)"ing  the  amount  of  the  note  for  vhich 
the  n')te  of  $25,000  had  been  pledged  as  collateral  securit}'. 
Upon  foreclosure  of  the  mortgage,  and  sale  of  the  premises,  it 
appi  ars  that  a  sum  would  b-i  rcaliz<  d  more  than  sutrieient  to  pay 
the  note  of  $25,000,  sulllci'  nt  to  pay  the  principal  and  interest 
of  the  note  of  $15,000,  and  leave  a  surplus.  The  question  arises 
whether  Sibley,  because  of  his  s  de  and  purchase  of  the  pledge, 
shall  be  permitted  to  retain  this  surplus  eml)raced  within  tlie  note 
of  $25,0(»0  as  his  own  jiroperty,  or  be  held  to  account  for  it  as 
trustee  to  Eugene  F.  Williams.  The  mortgage  note  of  $25,000 
was  executed  to  Truman  B.  Hand}'  ])y  his  c  Mldren,  solelv  for  his 
accommodation,  to  enable  him  to  pledge  the  same  as  collateral, 
or,  by  discount,  to  obtain  money  for  his  c  )nvenicnce,  and  for  no 
other  consideration.  They  executed  the  note  and  mortgage 
simply  as  surety  for  their  father.  They  had  no  knowledge  of 
the  power  of  sale  g  ven  by  him  to  Sibley  until  long  after  the  sale 

299 


ILL.   CAS.  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.  IX. 

of  the  pledge ;  nor  did  they  have  any  notice  of  the  time  or  place 
of  such  sale,  or  leara  of  the  sale  until  long  after  it  was  made. 
We  do  not  think  that,  under  the  circumstances,  Sibley  can  sub- 
ject their  property  to  the  payment  of  $25,000,  when  he  loantd 
to  their  father  only  $15,000;  or  that  he  can  retaia  the  balance, 
$10,000,  without  any  consideration  tlierefor.  Handy  deposited 
or  pledged  the  note  and  mortgage  as  collateral  security  for  the 
payment  of  $15,000,  and  no  more.  If,  at  the  maturity  and  non- 
payment of  his  claim,  Sibley,  without  resorting  to  a  sale  of  the 
pledge,  had  sought  to  enforce  payment  by  foreclosure  of  the 
mortgage,  he  would  have  been  entitled  out  of  the  proceeds  of  the 
sale  of  the  premises  only  to  the  amount  of  his  debt.  He  could 
not,  by  resorting  to  a  sale  of  the  pledge,  enlarge  his  equities,  or 
successfully  invoke  the  aid  of  a  court  of  equity,  in  an  effort  to 
exact  fiom  his  debtor  more  than  he  owed  him. 

The  principle  is  elementary,  and  as  old  as  the  Roman  law,  that 
if  the  creditor  exercises  his  power  of  sale  over  the  pledge  he  must 
give  the  surplus,  after  paying  himself,  to  the  debtor.  D.  13.  7. 
42  L.  ;  Hunter  Rom.  Law,  439.  And  as  betweea  debtor  and 
creditor,  whatever  may  be  the  effect  of  a  sale  as  to  annulling  all 
the  debtor's  residuary  interest  in  a  pledge  of  ordinary  chattels, 
when  a  question  arises  as  to  the  rights  of  third  parties,  who  are 
makers  of  accoramodati  >n  paper  pledged  as  collateral  security, 
such  parties  should  not  be  required  to  pay  the  creditor  more  than 
the  amount  of  his  debt.  It  has  been  decided  l»y  the  supreme 
court  of  Massachusetts,  in  Fisher  v.  Fisher,  98  Mass.  303,  that 
if  a  promissory  note,  which  is  without  considi  ration  as  between 
the  original  parties  thereto,  is  dlivered  witliout  consideration  to 
another  person,  who  i)ledges  it  before  its  maturity  as  collateral 
security  for  a  debt  of  his  own,  of  less  amount  than  the  face  of 
the  note,  the  pledgees,  if  tliey  take  it  without  notice,  are  to  be 
deemed  holders  for  va'ue,  and  may  maintain  an  action  thereon 
for  the  amount  due  them  upon  the  del>t  which  it  was  p'edged  to 
secure.  In  the  opin  on  of  tlie  court  it  was  said:  "  The  evidence 
estab'ished  that  the  plaintiff  received  the  note  from  the  holder 
before  its  maturity,  without  any  knowledge  of  the  circumstances 
under  which  the  d(  fendants  had  delivered  it  to  the  payee,  or  the 
purposo  for  which  the  latter  delivered  it  to  the  holder,  and  that  it 
was  held  by  the  plaintiffs  as  c»llateral  security  for  a  valid  debt  due 
from  the  holder  to  tin  m.  Under  tlie  decisions  of  the  court  these 
facts  proved  that  the  plaintiffs  were  bona  fide  holders  for  value, 
and  without  notice,  and  w.  re  therefore  entitled  to  recover  to  the 
extent  of  their  d*  bt  for  wh  eh  the  note  was  pledged  as  co'lateral 
securit}'."  In  Duncan  v.  Gilbert,  29  N.  J.  Law,  527,  it  is  stated 
as  the  rule  that  the  holders  of  accommodation  paper,  assigned  as 
collateral  security,  cannot  recover  of  the  accommodation  maker 
any  more  than  the  consideration  actually  advanced.  In  Bank  v. 
Doyle,  9  R.  I.  76,  it  was  held  that,  in  case  of  accommodation 
paper  pledged,  the  pledgee  can  recover  of  the  maker  only  the 
amount  of  the  debt  due  him  from  the  pledgeor.     And  in  Maitland 

300 


CH.  IX.]  RIGHTS    OF   BONA    FIDE    HOLDERS.  ILL.  CAS. 

V.  Bank,  40  Md.  540,  the  doctrine  was  laid  down  that,  in  an 
action  against  the  maker  of  a  promissory  note,  made  for  the 
accommodation  of  the  indorser,  brought  by  the  indorsee,  to  whom 
it  was  passed  as  collateral  security  for  the  payment  of  notes  dis- 
counted by  the  indorsee  for  the  benefit  of  the  indorser,  the 
measure  of  the  plaintiff's  right  of  recovery  is  the  amount  due 
on  the  debts  embraced  by  the  security,  and  that  it  is  incumbent 
on  the  plaintiff  to  t-how  what  debts  were  intended  to  be  secured 
by  the  note,  and  the  amounts  remaining  due  in  res[)ect  thereof. 
"Indeed,"  says  Alvey,  J.,  "all  that  the  plaintiff  is  entitled  to 
recover  is  the  amount  due  on  the  debts  intended  to  be  secured, 
it  being  conceded  that  the  note  was  taken  as  collateral  security 
merely.  In  such  case,  while  the  phiintiff  is  entitled  to  be  treated 
as  a  holder  for  value  it  is  only  so  to  the  extent  necessary  to  pro- 
tect the  debts  intended  to  be  secured." 

The  note  executed  by  the  children  of  Handy  and  pledged  as 
collateral  security,  being  only  accommodation  paper,  and  being 
held  in  pledge  by  Sibley,  witli  no  other  lien  upon  it,  they  might, 
after  the  payment  of  the  note  of  $15,000,  have  demanded  the 
surrender  or  cancellation  of  the  collateral.  But  by  the  assign- 
ment of  June  9,  1883,  it  was  agreed  by  and  between  Truman 
B.  Handy,  his  children,  and  P2ugene  F.  Wilhams,  that  there 
should  be  assigned  and  transferred  to  Williams  $10,000  of  and 
in  the  note  and  mortgage  of  $25,000,  the  surplus  over  and  above 
the  $15,000  due  Sibley,  which  surplus  should  be  applied  towards 
the  payment  of  Williams'  claim  against  Handy ;  Williams,  how- 
ever, agreeing  to  extend  the  payment  of  his  claim  for  one  year 
from  the  date  of  the  assignment.  The  record  does  not  disclose 
that  Williams  had  any  knowledge  of  the  power  which  Handy  had 
vested  in  Sibley  to  sell  at  public  or  private  sale  the  collateral  note 
and  mortgage,  and  to  become  the  purchaser  thereof.  The  terms 
of  tiie  assignment  of  June  9tli,  and  of  Sibley's  written  agreement 
attached  thereto,  would  not  bring  such  knowledge  home  to  Will- 
iams, any  more  than  to  the  child icn  of  Handy,  and  it  is  among 
the  agreed  facts  that  none  of  the  children,  until  long  after  the 
sale  of  July  21,  1883,  had  notice  or  knowledge  of  the  existence 
of  such  power  of  sale.  So  far  as  Williams  knew,  Sibley  was  a 
pledgee  of  negotiable  paper  secured  by  mortgage,  with  no  special 
authority  to  sell  the  same  as  he  would  a  pledge  of  ordinary 
chattels,  but  only  empowered  to  pursue  the  usual  course  of  fore- 
closure ])roceedings.  The  surplus,  $10,000,  was  set  apart  to 
him,  with  the  concurrence  of  all  parties  to  the  assignment,  in 
view  of  a  bona  fide  indebtedness  to  him  by  Handy,  and  for  the 
valuable  consideration  that  he  would  extend  the  payment  of  his 
claim  against  Handy.  There  is  nothing  in  the  record  inconsist- 
ent with  the  i)resuini)tion  that  the  assignment  to  Williams  of  June 
9,  1883,  and  tiie  agreement  by  Sibley  in  relation  thereto,  were 
one  and  the  same  transaction.  Williams  having  given  a  valuable 
consideration,  Sibley  was  bound  by  his  agreement  to  hold  the 
note   and  mortgage,  and    deliver   the    same    to    Williams    upon 

301 


ILL.   CAS.'  RIGHTS    OF    BONA    FIDE    HOLDERS.  [CH.   IX. 

receiving  paj^ment  of  $15,000,  and  interest.  The  proviso  of 
Sibley  tliat  notliing  contained  in  tlie  writing  signed  by  liim  should 
prevent  him  from  enforcing  his  security  at  any  time,  would  not 
be  notice  to  Williams  of  a  special  power  of  sale,  but  might  con- 
vey the  meaning  that  tbe  one  year's  extension  of  payment  to 
Handy  should  not  interfere  with  Sibley's  right  to  enforce  his 
security  at  any  time  by  a  regular  foreclosure  of  the  mortgage. 
And  as  between  "Williams  and  Handy,  and  the  children  of  Handy, 
the  equities  of  the  children  in  the  surplus  of  the  note  and  mort- 
gage, after  paying  Sibley's  claim  of  $15,000,  would,  under  the 
assignment  of  June  9th,  follow  and  inure  1o  the  benefit  of  Will- 
iams. Nor  do  we  conceive  that  the  rights  of  Williams  should  be 
concluded  in  equity  by  the  sale  of  the  i)ledge  under  a  power  of 
which  he  was  not  cognizant  at  the  time  he  agreed  with  Handy  to 
extend  the  time  for  the  payment  of  his  claim  against  him,  and 
which  extension  he  might  not  have  granted,  if  Sibley  had  defi- 
nitely notified  him,  as  he  might  have  done,  of  his  power  to  sell 
and  purchase  the  pledged  collaterals.  The  existence  of  the  power 
of  sale  was  a  fact  which,  under  the  circumstances,  Sibley,  as  a 
trustee,  should  have  disclosed  toWilHams,  and  his  failure  to  com- 
municate the  fact  to  him  was  contrary  to  the  principles  of  equity. 
In  our  opinion  the  defendant  in  error,  James  W.  Sibley,  has  no 
right  to  ask  anj^thing  more  than  the  full  payment  of  his  claim, 
with  interest ;  and  Eugene  F.  Williams  is  entitled  to  receive  the 
surplus  of  the  mortgage  of  $25,000  over  and  above  the  sura  of 
$15,000,  and  interest,  owing  by  Truman  B.  Handy  to  the  defend- 
ant in  error.  Judgment  reversed,  and  judgment  for  Eugene  F. 
Williams. 

302 


CHAPTER     X. 

PRESENTMENT  FOR  PAYMENT. 

Section  114.  For  what  purpose,  and  as  to  whom  is  presentment  for 
payment  necessary. 

115.  By  whom  must  presentment  be  made. 

116.  Possession  as  evidence  of  right  to  present  for  payment. 

117.  To  whom  should  presentment  be  made. 

118.  The  place  of  presentment. 

119.  The  time  of  presentment  —  Days  of  grace. 

120.  Computation  of  time  —  Legal  holidays. 

121.  The  hour  of  the  day  for  presentment. 

122.  Mode  of  presentment. 

§  114.  For  what  purpose  and  as  to  whom  is  present- 
ment for  payment  necessary. —  The  holder  of  :i  bill  of 
exchange  or  of  a  piomitjsory  note  almost  invariably  pre- 
sents the  paper  to  the  acceptor  or  maker,  respectively,  for 
payment  on  the  day  of  maturity;  and  there  is  a  more  or 
less  popular  notion  that,  if  he  fails  to  do  this,  at  the  proper 
time  and  in  the  proper  way,  the  holder  will  lose  all  his 
rights  in  such  paper  as  against  all  the  parties  to  it.  This 
is,  however,  not  true  as  to  the  acceptor  of  a  bill  or  maker 
of  a  note.  They  are  primary  obligors,  and  like  all  other 
primary  debtors,  their  liability  can  be  discharged  only  by 
payment,  or  the  equivalent  of  payment,  such  as  a  legal 
release  or  the  operation  of  the  statute  of  limitation. 

The  general  rule,  therefore,  is  that  a  failure  on  the  part 
of  the  holder  to  present  the  paper  for  payment  on  the 
day  of  maturity  will  not  discharge  the  acceptor  of  a 
bill  or  the  maker  of  a  note;  and  this  is  true,  even  where 
the  paper  is  made  payable  at  a  particular  bank,  or  some 
other  specified  })lace;  and  the  acceptor  or  maker  can  show 
that  he  had  deposited  sufiicient  funds  to  meet  his  obliga- 
tion at  the  stipulated  place  of  payment.^     And  this  rule  is 

1  Wolcottu.  Van  Santvoord,  17  Johns.  248  (8  Am.  Dec.  39()) ;  Hills  r. 
Place,  48  N.  Y.  520  ^8  Am.  Rep.  5G8) ;  Bank  of  the  U.  S.  v.  Smith,  11 

303 


§    114  PRESENTMENT    FOR    PAYMENT.  [CH.   X. 

rigorously  enforced  in  the  United  States,  even  where  the 
acceptor  or  maker  has  provided  sufficient  funds  at  the  stip- 
ulated bank  of  payment,  and  the  bank  has  failed  subse- 
quent to  the  maturity  of  the  paper.  The  lo.-s  in  such  a 
case  falls  on  the  acceptor  or  maker,  respectively,  and  the 
holder  can  nevertheless  enforce  payment  of  the  bill  or 
note.^ 

But  where  a  place  of  payment  is  specified  in  the  instru- 
ment, and  the  acceptor  or  maker  can  prove  that  he  was  at 
the  place,  on  the  day  of  maturity,  ready  to  pay  the  amount, 
or  had  so  deposited  sufficient  funds  to  enable  the  bill  or 
note  to  be  fully  honored ;  the  failure  of  the  holder  to  pre- 
sent for  payment  will  prevent  any  subsequent  recovery  of 
damages    and  costs,  and  subsequently  accruing  interest. ^ 

Apart  from  the  cases  in  which  there  is  a  stipul.ited  place 
of  payment,  the  failure  to  present  for  payment  on  the  day 
of  maturity  will  prevent  the  accrument  of  interest,  where 
there  is  no  stipulation  in  the  paper  for  the  payment  of 
interest  from  date,  and  the  paper  is  payable  on  demand. 
The  interest  will  accrue  in  such  a  case  only  from  the  time 
when  demand  is  made.^  But  where  interest  runs  from  the 
date,  or  the  time    of  maturity  is  certain  and  fixed  by  the 

Wheat.  173;  Cox  v.  National  Bank,  100  U.  S.  704;  Wilkins  v.  McGuire, 
2  App.  D.  C.  448;  Trammel  v.  Chipman,  74  Ind.  474;  Yeaton  v.  Berney, 
62  111.  617;  Jillson  v.  Hill,  4  Gray,  31G;  Reeve  v.  Pack,  6  Mich.  240; 
Mayer  v.  Thomas,  97  Ga.  772  (25  S.  E.  761);  Callanan  u.  Williams,  71 
Iowa,  303  (32  N.  W.  383);  Collins  v.  Trotter,  81  Mo.  275;  Jackson  v. 
Packer,  13  Conn.  342;  Am.  Nat.  Bank  v.  Junk  Bros.  &c.  Co.,  94  Tenn.  62; 
30  S.  W.  753  (accommodation  maker). 

1  Ward  V.  Smith,  7  Wall.  447;  Adams  v.  Hackensack  I.  Co.,  43  N.  J. 
L.  638;  (43  Am.  Eep.  40C) ;  Williamsport  Gas  Co.  u.  Pinkerton,  95  Pa. 
St.  62;  Wood  V.  Mechanics  &c.  Co.,  41  111.  267  (1  Am.  Lead.  Cas.  478). 
But  see  Lazier  v.  Horan,  55  Iowa,  75  (7  N.  W.  457). 

2  Murray  v.  East  India  Co.,  5  B.  &  Aid.  204;  Bacon  v.  Dyer,  12  Me. 
19;  Hills  V.  Place,  48  N.  Y.  520  (8  Am.  Rep.  568);  Budweiser  Brewing 
Co.  V.  Capparelli,  38  N.  Y.  S.  972;  16  Misc.  Rep.  502;  Mulherrin  u.  Han- 
num,  2  Yerg.  81 ;  Lazier  v.  Horan,  55  Iowa,  75  (7  N.  W.  457). 

3  Hunt  V.  Nevers,  15  Pick.  500  (26  Am.  Dec.  616)  ;  Proctor  v.  Whit- 
comb,  137  Mass.  303;  Hunter  v.  Wood,  54  Ala.  71 ;  Breyfogle  v.  Beckley, 
16  Serg.  &  R.  264;  Estate  of  Bk.  of  Pennsylvania,  60  Pa.  St.  471; 
Edgmon?;.  Ashelby,  76  111.  161;  Walker  u.  Wills,  5  Ark.  166;  Barough  v. 
White,  4  B.  &  C.  327. 

304 


CH.  X.]  PRESENTMENT    FOR    PAYMENT.  §114 

terras  of  the  instrument,  the  failure  to  make  presentment 
for  payment  at  the  proper  time,  will  not  prevent  the  accru- 
ment  of  interest  from  the  day  of  maturity,  or  affect  the 
holder's  right  to  such  subsequently  accruing  interest.^ 

The  rule  is,  however,  very  different  in  respect  to  parties 
secondarily  liable  on  a  bill  or  note.  These  parties  guaran- 
tee payment  of  the  instrument,  provided  the  presentment 
for  payment  is  made  when  the  paper  falls  due.  For  this 
reason,  the  failure  to  make  presentment  will  discharge 
the  drawer  of  a  bill  and  the  indorsers  of  a  bill  or  note.^ 
And  where  the  paper  is  payable  at  a  specified  place,  pre- 
sentment elsewhere  and  not  at  that  place,  will  not  preserve 
their  liability  to  the  holder.'' 

The  necessity  for  presentment  is  held  to  be  so  necessary 
to  the  perfection  of  the  liability  of  an  indorser,  that  it  has 
been  generally  held  that  an  indorser  after  maturity  cannot 
be  held  liable  on  his  indorsement,  until  a  demand  for  pay- 
ment has  been  made  on  the  acceptor  or  maker. ^ 

1  Suffolk  Bank  u.  Worcester  Bk.,  5  Pick.  106;  Sweet  v.  Hooper,  62 
Me.  54;  Flanders  v.  Chamberlain,  24  Mich.  306;  Joyner  v.  Turner,  19 
Ark.  690;  Staynor  v.  Knowles,  82  lud.  157;  Laughlin  v.  Wright,  63  Cal. 
113. 

2  Nat.  Shoe  &  Leather  Bk.  v.  Gooding,  87  Me.  337  (32  A.  967)  ;  Presby 
V.  Thomas,  1  App.  D.  C.  171;  Jaff'ray  v.  Krauts,  79  Hun,  449;  Cayuga  Co. 
Bk.  V.  Warden,  1  N.  Y.  413;  Duncan  v.  McCullough,  4  Serg.  &  R.  480; 
Peabody  Ins.  Co.  v.  Wilson,  29  W.  Va.  528  (2  S.  E.  888) ;  Burrittv.  Tid- 
marsh,  5  Bradvv.  341;  Bowers  v.  Indust.  Bk.,  58  111.  App.  498;  Magruder 
V.  Union  Bank,  3  Pet.  87;  Otto  v.  Beldcn,  28  La.  Ann.  302;  Los  Angeles 
N.  B.  V.  Wallace,  101  Cal.  28G  (36  P.  197) ;  HofEraau  v.  HoUingsworth,  10 
Ind.  App.  353  (57  N.  E.  960).  And  the  holder  not  only  loses  his  remedy 
against  the  drawer  or  indorser  on  the  bill  or  note  itself,  but  likewise  ou 
the  original  contract.  Adams  v.  Darby,  28  Mo.  162;  75  Am.  Dec.  115 
(drawer). 

3  Bank  of  U.  S.  v.  Smith,  11  Wheat.  171;  Cox  v.  National  Bank,  100 
U.  S.  704;  Shaw  v.  Reed,  12  Pick.  132;  Lawrence  v.  Dobyns,  30  Mo.  196. 

*  Berry  V.  Robinson,  9  Johns.  121  (6  Am.  Dec.  267);  Hunt  r.  Wad- 
leigh,  26  Me.  271  (45  Am.  Dec.  108) ;  Bassenhorst  v.  Wilby,  45  Ohio  St. 
333  (13  N.  E.  75);  McKinney  v.  Crawford,  8  Serg.  &  R.  351;  Graul  v. 
Strutzel,  53  Iowa,  712  (6  N.  AV.  119);  Shelby  v.  Judd,  24  Kan.  161.  In 
New  York,  it  is  held  that  no  subsequent  demand  is  necessary  to  hold  a 
post-due  indorser  liable,  if  the  bill  or  note  has  been  transferred  after 
maturity  with  the  protest  attached.  St.  John  v.  Roberts,  31  N.  Y.  441 
(88  Am.  Dec.  287). 

20  305 


§115  PRESENTMENT    FOR    PAYMENT.  [CH.   X. 

The  slrict  enforcement  of  the  requirement  of  presentment 
is  by  the  general  rule  of  law  limited  to  drawers  and  in- 
dorsers.  As  a  general  proposition,  therefore,  it  may  be 
stated,  that  a  party  who  is  not  a  drawer  or  indorser,  is  not 
discharged  from  his  liability,  if  the  presentment  has  not 
been  made  on  the  day  of  maturity.  Parties  secondarily 
liable,  who  are  not  rei^ular  parties  to  the  bill  or  note,  may, 
nevertheless,  be  held.  The  subjects  of  irregular  indorse- 
ments and  of  the  rights  and  obligations  of  guarantors,  are 
treated  fully  elsewhere.^  Presentment  on  the  day  of  ma- 
turity is  not  necessary  where  the  paper  is  non-negotiable 
for  any  reason.^ 

§  115.   By  whom    must  presentment    be    made. —  Any 

bona  fide  holder,  and  anyone  having  lawful  possession  for 
the  purpose  of  collection,  may  present  the  paper  to  the 
acceptor  or  maker  tor  payment  and  receive  payment.  Pay- 
ment to  such  a  person  will  extinguish  the  liability  of  all 
parties  to  the  paper  to  the  lawful  holder.^  But,  as  will  be 
explained  more  fully  in  a  subsequent  chapter,*  for  the  pur- 
pose of  making  protest  for  non-payment,  the  presentment 
is  required  to  be  made  by  the  notary  or  his  duly  authorized 
deputy. 

The  holder  may,  of  course,  make  presentment  for  pay- 
ment through  an  agent;  and  the  agent's  authority  need  not 
be  in  writing;  although,  probably,  the  acceptor  or  maker 
may  require  such  written  authority  or  an  indorsement  of 
the  paper  either  to  the  agent  or  in  blank,  where  it  is  made 
payable  to  order. ^  If  the  holder  be  dead,  his  personal 
representatives,  whenever  they  are  appointed,  should  make 

1  As  to  irregular  indorsements  see  ante,  §  92,  and  as  to  guarantors 
see    post,  ^   157. 

2  Smith  V.  Cromer,  66  Miss.  157  (5  So.  619). 

3  Leftley  v.  Mills,  4  T.  R.  175;  Bachelor  v.  Priest,  12  Pick.  399; 
Agnew  V.  Bk.  of  Gettysburg,  2  Harr.  &  G.  478. 

*  See  post,  Chapter.  XI. 

s  See  Seaver  u.  Lincoln,  21  Pick.  267;  Hartford   Bank  v.  Stedman,   3 
Conn.   489;  Bank  of  Utica  v.    Smith,   18  Johns.  230;  National  Hudson 
River   Bank   v.    Moffett,    17   App.    Div.    232    (45  N.  Y.  S.  588);  Cole  v. 
Jessup,  ION.  Y.  9G;   Mt.  Pleasant  Bk.  v.  McLeran,  26  Iowa,  306. 
306 


CII.  X.]  PRESENTMENT    FOR    PAYMENT.  §    116 

the  presentment.^  If  the  paper  is  payable  to  a  firm,  and 
one  of  them  dies,  presentment  should  be  made  by  the 
survivors. 2  If  the  holder  is  a  married  woman,  in  a  State 
where  the  common  law  disabilities  have  not  been  removed 
by  statute,  presentment  should  be  made  by,  and  payment 
to,  tlie  husband.^  And  if  the  holder  be  a  pledgee,  he 
should  make  presentment  for  the  benefit  of  himself  and  the 
pledgor.* 

§  116.  Possession  as  evidence  of  right  to  present  for 
payment. —  Only  one  who  has  the  right  to  receive  pay- 
ment, on  his  own  account,  or  as  the  representative  of 
another  can  make  the  presentment.  Hence  it  is  exceed- 
ingly important  to  determine  how  far  possession  may  be 
considered  as  evidence  of  the  holder's  right  to  present  for 
and  to  receive  pnyment,  so  as  to  determine  when  the  paper 
has  been  dishonored,  or  when  the  acceptor  or  maker  can 
safely  make  payment. 

If  the  paper  is  on  its  face  payable  to  bearer,  or  it  has 
been  indorsed  in  blank,  which  makes  it  subsequently  paya- 
ble to  bearer,  the  possession  of  the  bill  or  note  is  held  to  be 
prima  facie  proof  of  ownership,  and  of  the  right  of  the 
holder  to  make  presentment  and  to  receive  pavment.*" 

But  where  the  paper  is  payable  to  order,  and  there  has 
been  no  indorsement  in  blank,  possession  is  woi  prima  facie 
evidence  of  ownership.  The  burden  of  pi-oving  ownership 
and  consequent  right  to  make  i)resentnient  and  to  receive 
payment  is  on  the  holder,  by  [)roof  of  his  acquisition  of 
title  without  indorsement.^  This  can  be  done,  wheie  the 
indorsee  is  dead,  by  proof  of  the  holder's  appointment  and 
qualification  as  executor  or  administrator.    And  where  there 

»  White  V.  Stoddard,  11  Gray,  258  (71  Am.  Dec.  711),  and  ante,  §  49. 

2  See  ante,  §  41 . 

8  See  ante,  §  3G. 

•1  Cowperthwaite  v.  Sheffield,  1  Sandf.  447;  Jennison  v.  Parker,  7 
Mich.  355. 

'•>  Bachellor  v.  Priest,  12  Piclt.  399;  Agnew  v.  Bank  of  GeUysburir,  2 
Ilarr.  &  G.  478;  Jackson  u.  Love,  82  N.  C.  405  (33  Am.  lU-p.  685);  Cone 
V.  Browu,  15  Rich.  262. 

6  Pease  v.  Warren,  25  Mich.  9  (18  Am.  Rep.  58). 

307 


§    117  PRESENTMENT    FUR    PAYMENT.  [CH.  X. 

has  been  an  assignment  or  a  s^ale  under  execution  or  attach- 
meiit  of  the  note  or  bill,  by  proof  of  such  assignment,  execu- 
tion or  attachment. 

And  so  it  is  with  the  holder  of  an  unindorsed  bill  or 
note,  payable  lo  order,  who  claims  to  be  the  agent  of  the 
last  indorsee.  Such  professed  agent  must  prove  his  author- 
ity. Possession  by  him  of  such  a  bill  or  note  is  not  pri 771a 
facie  proof  of  his  right  to  make  presentment  and  to  receive 
payment.^  When  an  indorser's  possession  of  a  bill  or  note 
payable  to  order  \?,  pi^ima  facie  proof  of  ownership,  is  not 
definitely  determined  by  the  cases.  Some  of  them  hold 
that  his  possession  is  presumptive  evidence  of  his  right  to 
make  presentment  only  when  the  subsequent  indorsements 
have  been  canceled;  ^  while  others  maintp.in  that  cancella- 
tion of  the  subsequent  indorsements  is  not  essential  to  the 
piHma  facie  proof  of  his  right  to  make  presentment  and  to 
receive  payment.^ 

It  would  seem  more  rational,  and  more  in  accordance 
with  the  fundamental  principles  of  the  law  of  commercial 
paper  to  require,  in  making  out  a  pi'i7iia  facie  case  of 
ownership  by  an  indorser,  not  only  cancellation  of  the 
subsequent  indorsements,  but  also  proof  that  they  had 
been  canceled  by  the  subsequent  indorsees  or  with  their 
consent. 

§  117.  To  whom  should  preseutment  be  made. —  It  is 

clear  that  presentment  for  payment  should  be  made  to  the 
acceptor  of  the  bill  and  the  maker  of  the  note,  for  they 
are  the  primary  debtors.  And  if  the  acceptor  or  maker 
can  be  found,  the  presentment  must  be  made  to  him  in 

»  Doubleday  v.  Kress,  50  N.  Y.  410  (10  Am.  Rep.  502) ;  Dodge  v.  Nat. 
Exch.  Bk.,  30  Ohio  St.  1. 

2  Bank  of  Utica  v.  Smith,  18  Johns.  230;  Chautauqua  Co.  Bank  v. 
Davis,  21  Wend.  584;  Lawrence  v.  Russell,  77  Pa.  St.  460;  Briukley  v. 
Going,  1  111.  288;  Kyle  v.  Thompson,  3  111.  432. 

3  Dugan  V.  U.  S.  Bank,  3  Wheat.  172;  Bank  of  U.  S.  v.  United  States, 
2  How.  711;  Kerrick  v.  Stevens,  58  Mich.  297  (25  N.  W.  199);  Bank  of 
Kansas  City  r.  Mills,  24  Kan.  G04;  Best  v.  Nokorais  Nat.  Bk.,  76  111. 
608;  Norris  v.  Badger,  6  Cow.  449;  Page  v.  Lathrop,  20  Mo.  589. 

308 


CH.  X.J  PRESENTMENT   FOR   PAYMENT.  §    117 

person.  But  if  he  cannot  be  found  in  the  place,  where  the 
law  requires  presentment  to  be  made/  on  the  day  of 
maturity,  presentment  and  demand  should  be  made  of  any 
one,  who  is  of  the  years  of  discretion,  and  who  is  in  charge 
of  such  place,  whether  it  be  the  residence  or  place  of  busi- 
ness of  such  acceptor  or  maker. ^ 

Where  a  corporation  is  the  acceptor  or  maker,  care 
should  be  taken  to  make  presentment  to  the  officer  who  is 
authorized  to  represent  the  corporation  in  such  matters.^ 

If  the  acceptor  or  maker  be  dead,  and  his  representatives 
have  been  duly  appointed  and  qualified,  presentment  should 
be  made  to  such  rei)resentatives,  if  thc}'^  can  be  found. 
But  if  there  are  no  personal  rei)resentatives  at  the  time  of 
matutity  of  the  paper,  presentment  should  be  made  at  the 
place  of  residence  or  of  busiiic-s  of  the  deceased  obligor, 
to  any  person  of  years  of  discretion,  who  is  in  charge  of 
such  place  ;  unless  the  paper  is  payable  at  a  bank  or  some 
other  specified  place,  when  presentment  there  will  be 
sufficient.* 

If  the  acceptor  or  maker  is  a  firm,  presentment  to  one 
of  the  partners  is  sufficient,  even  though  the  partnership 
has  been  dissolved,  whether  by  death,  by  agreement,  or  by 
limitation.^     If  there  are  two  or  more  acceptors  or  makers, 

1  As  to  which  ?ee  post,  §  118. 

2  Merchants'  Bank  v.  Spicer,  6  Wend.  443;  Hunt  v.  Maybee,  7  N.  T. 
266;  Stinson  v.  Lee,  68  Miss.  113  (8  So.  272);  Bradley  v.  Northern  Bank, 
60  Ala.  259;  Draper  v.  Clemens,  4  Mo.  52;  Kleekamp  v.  Meyer,  5  Mo. 
App.  444;  Whaley  v.  Houston,  12  La.  Ann.  585.  And  it  seems  to  be  a 
requisite  that  the  certificate  of  protest  shall  name  or  describe  the 
person  to  whom  presentment  was  made,  unless  it  is  stated  that  no  one 
could  be  found,  to  whom  presentment  could  be  made.  Nave  v.  Rich- 
ardson, 36  Mo.  130. 

3  Newark  India  Rubber  Co.  v.  Bishop,  3  E.  D.  Smith,  48;  McKee  v. 
Boswell,  33  Mo.  567;  Casco  Bk.  v.  Mussey.  19  Me.  20. 

*  Magruder  v.  Union  Bk.,  3  Pet.  87;  Bank  of  Washington  v.  Reynolds, 
2  Cranch.C.  C.  289;  Hale  v.  Burr,  12  Mass.  80;  Groth  v.  Gyger,  31  Pa.  St. 
271  (72  Am.  Dec.  745) ;  Weems  v.  Farmers'  Bank,  15  Md.  231;  Davis  v 
Francisco,  11  Mo.  572  (49  Am.  Dec.  98);  Frayzer  v.  Dameron,  6  Mo. 
App.  153. 

s  Shedr.  Brett,  1  Pick.  401  (11  Am.  Dec.  209);  Hubbard  v.  Matthews, 
54  N.  Y.  i?,  (13  Am.  Rep.  562) ;  Greatlake  i'.  Brown,  2  Cranch  C.  C.  541; 

309 


§    118  PRESENTMENT    FOR    PAYMENT.  [CH.  X. 

who  are  not  partners,  presentment  should  be  made  to  all 
of  them,  at  least  where  they  all  reside  in  the  same  place. ^ 
But  where  they  reside  in  different  places,  the  necessity 
for  presentment  to  all  of  them  varies  according  to  circum- 
stances. 

It  is  certain  that  where  the  paper  is  payable  in  a  partic- 
ular place,  it  need  be  presented  to  the  resident  obligors 
only.^  And  where  there  is  no  express  stipulation  as  to 
place  of  payment,  it  has  been  held  that  prcf^entmeiit  need 
be  made  only  to  the  obligors  who  reside  in  the  most  acces- 
sible place. ^  But  it  would  seem  that  presentment  should 
be  made  to  all,  notwithstanding  their  residence  in  different 
places,  until  payment  has  been  received.  And  if  they 
reside  in  places  so  far  distant  from  each  other,  that  pre- 
sentment cannot  be  made  on  the  same  day,  it  must  be 
made  to  the  more  distant  one,  as  soon  as  possible  after 
maturity.* 

If  a  bill  is  accepted  siqjra  protest^  presentment  for 
payment  should  be  made  to  the  drawee  and  afterwards,  in 
case  of  non-payment  by  the  drawee,  to  the  acceptor  supra 
protest,  and  both  presentments  must  be  averred  in  the 
protest.'^ 

§  118.  The  place  of  presentment. —  If  a  place  of  pay- 
ment is  not  stated  in  a  bill  or  note,  it  is  a  presumption  of 
law  that  it  is  payable  at  the  domicile  of  the  acceptor  or 
maker,  or  at  the   place  where  he  conducts  his  business,  if 

Erwin  v.  Downs,  15  N.  Y.  575;  Fourth  Nat.  Bank  v.  Henschen,  52  Mo. 
207;  Mount  Pleasant  Bank  v.  McLeran,  26  Iowa,  306.  If  one  of  the 
partners  dies,  presentment  should  be  made  to  one  of  the  surviving 
partners,  and  not  to  the  personal  representatives  of  the  deceased  part- 
ner.    Cayuga  Co.  Bk.  v.  Hunt,  2  Hill,  635. 

1  Arnold  v.  Dresser,  8  Allen,  435;  Gates  v.  Beecher,  60  N.  Y.  518  (19 
Am.  Kep.  207);  Britt  v.  Lawson,  15  Hun,  123;  Bank  of  Red  Oak  v. 
Orvis,  40  Iowa,  332;  Benedict  v.  Schraiegs,  13  Wash.  476  (43  P.  374) ; 
Nave  V.  Richardson,  36  Mo.  130. 

2  Smith  V.  Little,  10  N.  H.  526. 

3  Harris  v.  Clark,  10  Ohio,  6. 

*  See  1  Daniel's   Negot.  Inst.,  §  595;   1  Parsons  N.  &  B.  363,  note  w. 
As  to  joint  and  several  notes  and  billt^  see  ante,  §§  10,  11. 
5  See  ante,  §71. 
310 


CH.  X.]  PRESENTMENT   FOll   PAYMENT.  §   118 

he  has  any.     And  presentment  should  be   made  to  him  at 

such  ph\ce.     The  phice  of  the  date  of  the  instrument  is 

prima  facie  the  phice  of  payment;   and  if  it  happens  that 

the  place  of  date  is  not  the  domicile  or  place  of  business 

of  the  acccjitor  or  maker,  so  that  he  cannot  be  found  in 

the  i)lace  of  date,  the  holder  is   not  obliged  to  make  in-  £-^^10^ 

quiries  after  the  obligor's  al)ode  or  place  of  abode;  and  if  ]f)0  ^-  ^ 

he  does  not  know  where  the  obligor  is  to  be  found,  the  ,'2^^,r -vn>  ' 

holder  satisfies  the  requirements  of  the  law,  if  he  holds  the    3^l--^- 

paper  at  the  place  of  date  in  readiness  to  receive  payment. 

But    if  he    knows  where  the  acceptor  or  maker  is  to  be 

found,  the  presentment  must  be  made  to  the  latter  at  his 

actual  place  of  business  or  domicile.^ 

The  parties  may,  however,  agree  upon  a  different  place 
of  payment,  and  presentment  must  then  be  made  at  the 
stipulated  place  and  need  not  be  presented  anywhere  else, 
whether  such  stipulation  has  been  inserted  in  the  body  of 
the  bill  or  note,  or  it  constitutes  a  collateral  agreement; 
and  whether  such  collateral  agreement  is  verbal  or  is 
reduced  to  writing.  The  only  difference  in  effect  is,  that 
if  the  stipulation  is  collateral,  it  will  be  binding  only  on 
those  subsequent  indorsers  or  transferees  of  the  bill  or 
note,  who  know  of  the  agreement. ^  Where  the  paper  is 
made  payable  at  either  of  two  or  more  places,  presentment 
may  be  made  at  either  of  them,  and  need  be  made  at  only 
one.  This  ruling  hus  been  nnule  quite  frequently  where  a 
bill  or  note  is  payable  *'  at  any  bank  "  in  a  certain   place. ^ 

J  Cox  V.  National  Bank,  100  U.  S.  704;  Britton  v.  Nichols,  104  U.  S. 
757;  Hazard  w.  Spencer,  17  R.  I.  5G1  (23  A.  729;  Smith  v.  Philbricli,  10 
Gray,  252  (GO  Am.  Dec.  315);  Farnsworth  v.  Mullen,  1(J4  Mass.  112  (41 
N.  E.  131") ;  Meyer  v.  llibscher,  47  N.  Y.  2Go;  In  re  Parisian  Cloaii  &  Suit 
Co. '8  Estate,  173  Pa.  St.  507  (34  A.  224)  ;  Apperson  v.  Bynum,  5  Coldw. 
341. 

2  Cox  V.  National  Baul<,  100  U.  S.  704;  Peabody  Ins,  Co.  v.  Wilson, 
29  W.  Va.  528  (2  S.  E.  888) ;  Meyer  v.  Hibscher,  47  N.  Y.  2G5;  Troy  City 
Bank  v.  Lanman,  19  N.  Y.  477;  Appeal  of  Greenboum,  173  Pa.  St.  507 
(84  A.  224)  ;  Brown  v.  Jones,  113  Ind.  4G  (13  N.  E.  857). 

3  Jackson  v.  Packer,  13  Conn.  342;  Way  i'.  Butterworth,  lOG  Mass.  75; 
s.  c.  108  Mass.  GOS;  Maiden  Bk.  r.  Baldwin,  13  Gray,  154  (74  Am.  Dec. 
627);  Boit  v.  Corr.  54  Ala.   112;  Wilcox  v.  Williams,  5  Nev.  20G.     But 

311 


§   118  PRESENTMENT   FOR   PAYMENT.  [CH.  X. 

As  long  as  the  drawee  has  not  accepted  a  bill,  which  is 
made  payable  in  another  place,  a  joint  presentment  for 
acceptance  and  payment  may  be  made  at  either  place,  z.  e., 
at  his  place  of  business  or  domicile  or  at  the  place  of  pay- 
ment. After  acceptance,  presentment  for  payment  must, 
of  course,  be  made  at  the  place  of  payment.*  If  the  bill 
has  been  accepted  supra  protest,  the  presentment  to  the 
drawee  must  be  made  at  his  domicile  or  place  of  business.'^ 

After  determining  in  what  city  or  town  presentment 
should  be  made,  the  further  question  remains  to  be  an- 
swered, whether  presentment  should  be  made  to  the 
acceptor  or  maker  at  his  residence  or  at  his  place  of  busi- 
ness. If  the  presentment  is  made  to  such  obligor  in 
person,  and  he  does  not  object  to  the  place  of  presentment, 
and  gives  that  objection  as  his  reason  for  refusal  to  honor 
his  obligation,  it  will  be  a  good  presentment,  it  matters 
not  where  it  was  made.  Presentment  in  the  street  would 
be  sufficient  under  such  circumstances.^  But  where  the 
presentment  is  not  made  to  the  acceptor  or  maker  in 
person,  or  he  objects  to  the  unusual  place  of  presentment, 
the  presentment  is  not  good,  unless  it  is  made  at  his  resi- 
dence or  place  of  business.  If  he  has  no  place  of  business, 
or  it  cannot  be  found,  presentment  must  be  made  at  his 
residence  in  the  place  of  payment.* 

But  where  the  acceptor  or  maker  has  a  regular  place  of 

tlie  office  of  a  private  banker  is  not  included  in  the  stipulation  for  pay- 
ment "at  any  bank."  Way  v.  Butterworth,  108  Mass.  608;  Nash  w. 
Brown,  165  Mass.  384;  43  N.  E.  180  (Trust  company). 

1  Mason  v.  Franklin,  3  Johns.  202.  And  see  Wolcott  v.  Van  Sant- 
voord,  17  Johns.  248  (8  Am.  Dec.  396)  ;  Bank  of  U.  S.  v.  Smith,  11  Wheat. 
173. 

2  Mitchell  V.  Barney,  10  B.  &  C.  4. 

3  King  u.  Holmes,  11  Pa.  St.  456;  Parker  v.  Kellogg,  158  Mass.  90  (32 
N.  E.  10.38);  Gates  v.  Beecher,  60  N.  Y.  518  (19  Am.  Rep.  207);  Frost  u. 
Stokes,  56  N.  Y.  Super.  76;  King  v.  Crowell,  51  Me.  244  (14  Am.  Rep. 
560). 

*  Packard  v.  Lyon,  5  Duer,  82;  Bank  of  New  Orleans  v.  Whittemore, 
12  Gray,  469;  Jarvis  v.  Garnett,  39  Mo.  271.     And  the  same  requirement 
is  enforced,  where  he  has  abandoned  his  place  of  business.     Talbot  v. 
Nat.  Bank,  129  Mass.  67  (37  Am.  Rep.  302). 
312 


CH.  X.]  PRESENTMENT    FOR    PAYMENT.  §118 

business,  where  he  is  in  the  habit  of  transacting  his  busi- 
ness in  general,  presentment  must  be  made  at  that  phice, 
and  not  at  his  residence.  And  if  he  cannot  be  found  there, 
or  any  one  else,  to  whom  presentment  can  be  made  in  his 
absence,  he  need  not  be  sought  at  his  residence.  The 
presentment  at  the  place  of  business  is  sufficient  to  bind 
drawer  and  indorsers.^  If  the  maker  or  acceptor  has  two 
regular  places  of  business  in  the  same  city  or  town,  and  the 
address  of  one  is  given,  presentment  must  be  made  at  the 
given  address,  and  presentment  at  the  other  place  is  not 
sufficient.^ 

Where  a  place  of  payment  is  designated  in  the  l)ill  or 
note  ;  as  for  example,  at  a  bank,  presentment  must  be 
made  there  and  need  not  be  made  anywhere  else,  although 
the  bank  was  found  to  be  closed,  or  no  one  could  be  found 
there  who  was  authorized  to  receive  payment.  If,  how- 
ever, the  bank  has  transferred  its  business  to  another  bank 
or  banker,  and  the  holder  knows  of  such  transfer,  and  to 
whom,  presentment  should  be  made  at  the  other  bank  or 
banker.  But  in  no  such  case  is  it  necessary  to  make  pre- 
sentment at  the  place  of  business  or  residence  of  the 
acceptor  or  maker. '^  If  the  holder  does  not  know  the  place  of 
business  or  residence  of  the  acceptor  or  maker,  and  there 
is  no  stipulation  of  a  place  of  payment,  the  holder  must  make 
diligent  inquiry  after  the  habitat  of  the  acceptor  or  maker; 
and  not  until  he  has  exhausted  every  reasonable  means  of 
securing   the  desired  information   of  the  whereabouts  of 

1  Wiseman  v.  Chiapella,  23  How.  368;  Shed  v.  Brett,  1  Pick.  401  (11 
Am.  Dec.  209);  Berg  v.  Abbott,  83  Pa.  St.  177  (24  Am.  Rep.  158);  Bank 
of  Commonwealth  v.  Mudgett,  44  N.  Y.  514;  Bynum  v.  Apperson,  9 
Heisk.  632;  Ilutcbison  v.  Crutcher  (Tenn.  '07),  39  S.  W.  725;  John  u. 
City  Nat.  Bank,  62  Ala.  529  (34  Am.  Rep.  35).  But  presentment  is  not 
sufl3cient,  when  it  is  made  at  a  place,  where  he  is  transacting  .«ome 
special  business,  and  which  is  not  his  permanent  and  general  place  of 
business.     Sussex  Bank  v.  Baldwin,  2  Harr.  487. 

-  Brooks  V.  Iligby,  11  Ilun,  235. 

^  Central  Bank  v.  Allen,  10  Me.  41;  Douglass  v.  Bank  of  Commerce, 
97  Tenn.  133;  36S.  W.874;  Guignon  v.  Union  Tr.  Co.,  156  111.  135(40 
N.  E.  556^;  Berg  r.  Abbott,  83  Pa.  St.  177  (24  Am.  Rep.  158);  Waring  v. 
Belts,  90  Va.  46  (1 7  S.  E.  739) . 

313 


§    119  PRESENTMENT    FOR    PAYMENT.  [CH.   X. 

sacli  acceptor  or  maker,  can  he  protest  for  non-payment, 
without  making  the  required  presentment.^ 

§  119.    The   time    of  presentment  —  Days  of   grace. — 

In  order  to  hold  the  drawer  and  indorsers  liable  on  a  bill 
or  note,  it  is  necessary  to  present  for  payment  on  the  day 
of  maturity.  And  presentment  before  or  after  the  exact 
day  of  maturity  will  not  be  sufficient  unless  the  holder 
has  a  sufficient  excuse  for  delay. ^  But  this  statement  is 
to  be  qualified  by  the  allowance  of  the  so-called  days  of 
grace.  Instead  of  being  payable  on  the  day  named  in, 
or  computed  from  the  terms  of  the  bill  or  note,  inde- 
pendently of  statute,  it  is  really  payable  three  (by 
local  custom,  sometimes,  four)  days  after  such  time. 
This  rule  grew  out  of  an  old  commercial  custom  of  allow- 
ing drawees  and  acceptors  this  extra  time  for  making 
arrangements  for  the  payment  of  the  bill.  At  first,  this 
indulgence  was  a  matter  of  grace,  and  not  a  matter  of  com- 
mon right,  as  it  finally  became,  and  is  now,  wherever  it 
has  not  been  abolished  by  statute.  Hence  the  name,  days 
of  grace.  After  the  custom  grew  into  a  right,  which  could 
be  demanded  by  the  acceptor,  it  was  extended  to  all  kinds 
of  commercial  paper  where  the  time  of  maturity  was  a 
certain  date,  or  a  specified  time  after  date,  sight  or  demand, 
but  not  to  paper  payable  on  demand.^     Bills  payable  at  sight 

1  Grafton  Bank  v.  Cox,  13  Gray,  503;  Taylor  v.  Snyder,  3  Den.  145  (45 
Am.  Dec.  457);  Witkowski  v.  Maxwell,  69  Miss.  56  (10  So.  453);  Gil- 
christ V.  Donnell,  53  Mo.  591;  Martin  v.  Grabinsky,  38  Mo.  App.  359. 

2  Mechanics'  Bk.  v.  Merchants'  Bk.,  6  Met.  13;  Pendleton  v.  Knicker- 
bocker L.  Ins.  Co.,  5  Fed.  238;  7  Fed.  IGO;  Windham  Bk.  v.  Norton,  22 
Conn.  213  (56  Am.  Dec.  397)  ;  Walsh  v.  Dart,  12  Wis.  635;  Griffin  v.  Goff, 

12  Johns.  423;  Georgia  Niit.  Bank  v.  Ilemlerson,  46  Ga.  487  (12  Am.  Rep. 
590) ;  McMurchey  v.  Robinson,  10  Ohio,  196. 

3  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Messmore  v.  Morrison, 
172  Pa.  St.  300  (34  A.  45);  Osborne  v.  Smith,  14  Conn.  3C6;  WoorufC  u. 
Merchants'   Bank,  25  Wend.  673;  Bower  v.  Newell,  8  N.  Y.  190;  s.   c. 

13  N.  Y.  290  (64  Am.  Dec.  550)  ;  First  Nat.  Bk.  v.  Price,  52  Iowa,  570  (3 
N.  W.  639);  Guignon  v.  Union  Tr.  Co.,  156  111.  135  (40N.E.556);  Green 
V.  Raymond,  9  Neb.  295  (2  N.  W.  881);  Carey-Lombard  Co.  v.  First.  Nat. 
Bk.,  86  Tex.  299  (24  S.  W.  260).  See  Commercial  Bank  v.  Varnum,  49 
N.  Y.  269. 

31t 


CH.   X.]  PRESENTMENT    FOR    TAYMENT.  §    120 

have  been  held  to  be  both  entitled  ^  and  not  entitled^  to 
days  of  grace.  The  custoin  of  allowing  days  of  grace  has 
also  been  abolished  by  statute  in  many  of  the  States.^ 

If  the  paper  is  payable  in  installments,  days  of  grace  will 
be  allowed  for  the  payment  of  each  installment,  unless  the 
bill  or  note  stipulates  that  the  whole  obligation  matures  on 
default  as  to  one  installment,  when  the  one  presentment 
and  refusal  to  pay  constitutes  a  dishonor  of  the  whole  bill 
or  note.* 

Days  of  grace  are  not  allowed,  where  the  instrument  is 
for  some  reason  nonnegotiable,^  or  where  the  pa[)er  con- 
tains, or  the  parties  have  agreed  to,  a  waiver  of  the  right.^ 

§  120.    Computation    of    time — Legal    holidajs.  —  In 

all  computations  of  the  time  of  payment  of  bills,  notes  and 
checks,  the  day  of  date  is  excluded,  and  the  last  day  of  the 
computation  included.  If  the  paper  is  payable  in  one  or 
more  years  after  date,  the  first  or  other  subsequent  anni- 
versary of  the  date  would  be  the  day  of  payment,  unless 
days  of  grace  are  allowed,  when  the  day  of  maturity  will 
be  three  days  after  such  anniversary  of  the  date.  The 
same  would  be  the  rule,  where  the  paper  is  payable  one  or 
more  weeks  or  months  after  date.  If  the  unit  of  time  be 
a  month,  a  calendar  month  is  presumed  to  be  intended, 
and  the  day  of  maturity  will  be  the  same  day  of  the  suc- 
ceeding month,  on  which  the  bill   or  note  is  dated.     For 

1  Cribbs  v.  Adams,  13  Gray,  597;  Thornburgh  v.  Emmons,  23  W.  Va. 
325;  Walsh  v.  Dart,  12  Wis.  035;  Ward  v.  Sparks,  53  Ark.  519  (14  S.  W. 
898);  Knotty.  Venable,  42  Ala.  18G. 

2  Trask  v.  Martin,  1  E.  D.  Smith,  505;  Daltou  City  Bank  v.  Haddock, 
64  Ga.  584;  Lucas  v.  Ladew,  28  Mo.  342. 

3  It  is  abolished  by  the  Negotiable  Instruments  Law  recently  enacted 
in  New  York  and  other  States,     See  Appendix. 

*  Oridge  r.  Sherburne,  11  M.  W.  374.  But  no  days  of  grace  are 
allowed  iu  the  payment  of  Interest.  Macloou  v.  Smith,  49  Wis.  200 
(5  N.  W.  336).  But  see  contra  Coffin  v.  Loring,  5  Allen,  153,  where 
installment  of  principal  matures  at  the  same  time  with  the  interest. 

5  Avery  v.  Stewart,  2  Conn.  69  (7  Am.  Dec.  240);  Lamkiu  v.  Nye,  43 
Miss.  241. 

6  Perkins  v.  Franklin  Bank,  21  Pick.  483. 

315 


§   121  PRESENTMENT   FOR   PAYMENT.  [CH.  X. 

example,  if  a  note  is  dated  the  fifteenth  of  January,  paya- 
ble one,  two  or  three  months  after  date,  it  will  be  due 
(days  of  grace  excluded),  the  fifteenth  day  of  February, 
March  and  April,  respectively.  But  if  the  date  of  the 
paper  be  the  last  day  of  the  month,  for  example  the  31st 
of  January,  and  payable  one,  two,  or  three  months  after 
date,  the  day  of  maturity  will  be,  respectively,  the  twenty- 
eighth  of  February  (twenty-ninth,  in  leap  year),  thirty- 
first  of  March,  and  thirtieth  of  April. ^ 

If  the  paper  falls  due  on  a  Sunday  or  other  legal  holi- 
day, presentment  must  be  made  on  the  day  succeeding,  if 
the  days  of  grace  are  not  allowed.  But  if  the  days  of  grace 
are  allowed,  then  on  the  day  preceding,  namely  the  second 
day  of  grace.  And  if  two  holidays  come  together,  on  the 
first  day  of  grace.  But  under  no  circumstances,  except 
when  otherwise  provided  by  statute,  can  the  acceptor  of  a 
bill  or  maker  of  a  note  be  required  to  perforin  his  obliga- 
tion prior  to  the  actual  day  of  maturity,  because  of  the  con- 
currence of  legal  holidays  at  that  time.^  If  the  holiday  does 
not  fall  on  the  last  day,  it  is  counted  in  the  computation  of 
time,  as  if  it  had  been  a  business  day.^  The  courts  take 
judicial  notice  of  the  dates  on  which  legal  holidays  fall.* 

§  121.  The  hour  of  the  day  for  presentment. —  Pre- 
sentment for  payment  is  required  by  the  law  to  be  made  at 
a  reasonable  hour  of  the  day.     What  is  a  reasonable  hour 

1  Roehner  v.  Knickerbocker  L.  Ins.  Co.,  63  N.  Y.  163;  Ammidown  v. 
Woodman,  31  Me.  580;  Hartford  Bank  v.  Barry,  17  Mass,  93;  Daly  u 
Proetz,  20  Minn.  411;  McMurchey  v.  Robinson,  10  Ohio,  496;  McCoy  v 
Farmer,  65  Mo.  244. 

2  Barlow  v.  Gregory,  31  Conn.  261;  Staples  v.  Franklin  Bk.,  1  Met.  43 
(35  Am.  Dec.  345) ;  Salter  v.  Burt,  20  Wend.  205  (32  Am.  Dec.  530) ;  Reed 
V.  Wilson,  40  N.  J.  L.  (12  Vroom)  29;  Hirshfleld  u.Ft.  Worth  Nat.  Bauk, 
83  Tex.  452  (18  S.  W.  743);  Barrett  v.  Allen,  10  Ohio,  426;  Hitchcock  v. 
Hogan,  99  Mich.  124  (57  N.  W.  1095)  ;  Kuntz  v.  Tempel,  48  Mo.  75;  Bren- 
cen  V.  Vogt,  97  Ala.  647  (11  So.  893);  Capital  Nat.  Bank  v.  Am.  Esch. 
Nat.  Bk.  (Neb.  '97),  71  N.  W.  743;  overruling  Bank  v.  McAllister,  33 
Neb.  646  (50  N.  W.  1040). 

3  Woolley  V.  Clements,  11  Ala.  220;  Roberts  v.  Wold,  61  Minn.  291  (63 
N.  W.  739)  ;  Bartlett  v.  Leathers,  84  Me.  241   (24  A.  842). 

*  Reed  v.  Wilson,  40  N.  J.  L.  (12  Vroom)  29. 
31(5 


CH.  X.]  PRESENTMENT   FOR   PAYMENT.  §   122 

depends  upon  the  circumstances.  If  the  bill  or  note  is 
payable  at  a  bank,  presentment  should  be  made  during 
banking  hours.  If  the  paper  is  payable  generally,  and  the 
acceptor  or  maker  has  a  place  of  business,  at  which  pre- 
sentment should  be  made,  business  hours  are  the  proper 
time  for  presentment;  and  if  the  obligor  has  no  place  of 
business,  so  that  presentment  must  bo  made  at  his  resi- 
dence, any  hour  before  the  customary  time  for  retirement 
will  be  considered  reasonable.  But  in  all  these  cases,  the 
reasonableness  of  the  hour  of  presentment  is  only  impor- 
tant when  the  holder  fails  to  find  the  acceptor  or  maker. 
If  the  presentment  is  actually  made  to  him  in  person  on  the 
day  of  maturity,  it  matters  not  at  what  hour  it  is  made.^ 

The  acceptor  or  maker  has  the  whole  day  in  which  to 
make  payment.  But  a  second  demand  cannot  be  required 
of  the  holder.  If  the  paper  is  payable  in  a  bank,  it  would 
seem  to  be  necessary  to  keep  the  bill  or  note  at  the  bank, 
so  that  the  acceptor  or  maker  may  make  payment  there  at 
any  time  during  the  business  hours  of  the  day.  If  it  is 
payable  at  the  place  of  business  or  residence  of  the  obligor, 
he  must  seek  the  holder,  in  order  to  make  payment,  where 
he  fails  to  pay,  when  the  presentment  was  made.^ 

§  122.  Mode  of  presentment. —  The  person  who  makes 
the  presentment  must  have  possession  of  the  bill  or  note, 
so  that  he  may  deliver  it  to  the  acceptor  or  maker,  if  he 
makes  payment.  And  if  the  acceptor  or  maker  demands 
it,  the  holder  must  exhibit  the  bill  or  note,  so  that  the 
obligor  may  inspect  it,  if  he  wants  to  do  so.  The  paper 
need  not  otherwise  be  exhibited;  although  it  seems  to  be 
necessary,  in  making  a  presentment  for  payment,  that  the 

1  Farasworth  v.  Allen,  4  Gray,  453;  Bank  of  Syracuse  v.  Hollister,  17 
N.  Y.  46  (72  Am.  Dec.  41G)  ;  Salt  Springs  Nat.  Bank  v.  Burton,  58  N.  Y. 
430  (17  Am.  Rep.  265V,  Reed  v.  Wilson,  40  N.  J.  L.  (12  Vroom)  29;  First 
Nat.  Bank  v.  Owens,  23  Iowa,  185;  Skclton  v.  Dusten,  92111.  49;  Wallace 
V.  Crilley,  46  Wis.  577  (1  N.  W.  301);  MacFarland  v.  Pico,  8  Cal.  626; 
Goodloe  V.  Godley,  13  Smed.  &  M.  233  (51  Am.  Dec.  159). 

2  Harrison  v.  Crowder,  6  Smed.  &  M.  4(54  (14  Am.  Dec.  290) ;  1  Par- 
sons N.  &  B.  374. 

317 


§    122  PRESENTMENT    FOR    PAYMENT.  [CH.  71. 

demand  of  payment  should  be  accompanied  by  some  state- 
ment or  indication  that  the  paper  is  in  the  actual  posses- 
sion of  the  party  who  is  making  the  presentment.^  Where 
the  paper  is  payable  at  a  bank,  it  is  sufficient  if  it  is  in 
the  conscious  possession  of  an  officer  of  the  bank,  who  is 
entitled  to  receive  payment. ^ 

It  has  also  become  established  usage  in  many  of  the 
States  for  the  bank  which  holds  the  paper,  to  give  notice 
to  the  acceptor  or  maker  a  few  days  before  the  day  of 
maturity,  that  his  paper  is  at  the  bank  and  will  be  due  on 
a  certain  day.  Where  the  paper  is  paj^able  at  the  bank, 
there  can  be  no  doubt,  that  this  notice  fully  takes  the  place 
of  a  more  formal  presentment.^  But  it  is  not  so  clear, 
whether  this  preliminary  notice  takes  the  place  of  a  pre- 
sentment for  payment  on  the  day  of  maturity,  when  the 
paper  is  not  payable  at  the  bank,  and  is  only  deposited 
there  for  collection.  This  question  has  been  answered  in 
the  affirmative^  and  in  the  negative.^ 

It  is  also  required  that  the  demand  of  payment  should 
not  vary  from  the  tenor  of  the  paper.  It  will  not  be  a 
good  presentment,  if  gold  is  demanded,  where  the  paper 
does  not  call  for  payment  in  gold.® 

^  Musson  V.  Lake,  4  How.  262;  Arnold  v.  Dresser,  8  Allen,  435;  Legg 
V.  Vinal,  165  Mass.  555  (43  N.  E.  518);  Lockwood  v.  Crawford,  IS  Conn. 
361;  Ocean  Nat.  Bank  v.  Faut,  50  N.  Y.  474;  Waring  v.  Betts,  90  Va.  96 
(17  S.  E.  739)  ;  King  v.  Crowell,  51  Me.  244  (89  Am.  Dec.  366);  Draper  v. 
Clemens,  4  Mo.  52;  Smith  v.  Gibbs,  2  Smed.  &  M.  479. 

2  Chicopee  Bk.  v.  Phila.  Bk.,  8  Wall.  641;  Folger  v.  Chase,  18  Pick. 
63;  Nat.  Hudson  River  Bank  v.  Moffett,  17  App.  Div.  232  (45  N.  Y.  S. 
588);  Merchants'  Bk.  v.  Elderkin,  25  N.  Y.  178;  Hallowell  v.  Curry,  41 
Pa.  St,  322;  State  Bk.  v.  Napier,  6  Humph.  270  (44  Am.  Dec.  308); 
Huffaker  v.  Nat.  Bk.  of  Monticello,  13  Bush,  644;  People's  Bk.  v.  Brooke, 
31  Md.  7  (1  Am.  Rep.  11);  Lawrence  v.  Dobyns,  30  Mo.  196. 

«  Camden  v.  Doremus,  3  How.  515;  Mills  v.  Bk.  of  U.  S.,  11  Wheat. 
431;  Lincoln  &c.  Bk.  v.  Page,  9  Mass.  155  (6  Am.  Dec.  52);  Dykmau  v. 
Northridge,  36  N.  Y.  S.  962;   1  App.  Div.  26. 

^  Jones  V.  Fales,  4  Mass.  245;  Whitwell  v.  Johnson,  17  Mass.  449; 
Grand  Bank  v.  Blanchard,  23  Pick.  505. 

5  Pearson  v.  Bk.  of  Metropolis,  I  Pet.  89;  Barnes  v.  Vaughan,  6  R. 
I.  259;  Farmers'  Bank  v.  Duvall,  7  Gill  J.  &78. 

6  Langerberger  v.  Kroeger,  48  Cal.  147. 

318 


CH.  X.]  PRESENTMENT   FOR  PAYMENT.  ILL.  CAS. 


ILLUSTRATIVE  CASES. 

Lazier  v.  Horan,  55  Iowa,  75  (7  N.  W.  457). 

Smith  V.  Cromer,  6(J  Miss.  157  (5  So.  G19). 

Guignon  v.  Union  Trust  Co  ,  lofj  111.  135  (40  N.  E.  556). 

Nash  V.  Brown,  165  Mass.  384  (43  N.  E.   180). 

Waring  v.  Belts.  90  Va.  90  (17  S.  E.  739). 


Deposit  by  Maker  of  Xote,  Payable  at  Bank,  of  Money 
at  Such  Bank  to  pay  such  Note  Discharges  3Iaker, 
if  Bank  Fails  After  Day  of  Maturity,  and  there  has 
been  no  Presentment. 

Lazier  v.  Horan,  55  Iowa,  75  (7  N.  \V.  457). 

Action  upon  a  promissory  note,  and  for  the  foreclosure  of  a 
mortgage.  There  was  a  judgment  and  decree  of  foreclosure 
against  the  defendant,  and  he  appeals.  The  facts  appear  in  the 
opinion. 

RoTHROCK,  J.  The  promissory  note,  which  is  the  foundation 
of  the  action,  is  in  these  words: — 

"  $1,250.  Des  Moines,  Iowa,  March  21,  1872. 

"  On  or  before  the  twenty- first  day  of  March,  1874,  I  promise 
to  pay  to  William  Bradcn  or  order  $1,250,  with  interest  thereon 
from  this  date  until  paid,  at  the  rate  of  10  per  cent  per  annum, 
paj'able  annually  on  tlie  twenty-first  daj'^  of  March  in  each  year, 
for  value  received,  principal  and  interest  paj^able  at  B.  F.  Allen's 
bank  in  the  city  of  Des  Moines.  Should  any  of  said  interest 
not  be  paid  when  due,  it  shall  bear  interest  at  the  rate  of  10  per 
cent  per  annum  from  the  time  the  same  becomes  due,  and  a  fail- 
ure to  pay  any  of  said  interest  within  30  days  after  due  shall 
cause  the  whole  of  this  note  to  thereupon  become  due  and 
collectible  at  once. 

"  TlMOTHV       X        HoRAN." 
mark. 

The  mor'gage  securing  this  note  is  duly  stamped  with  United 
States  revenue  stamp,  legally  canceled  ;  indorsed  cm  the  back  as 
follows,  to  wit:   '"Pay  to  the  order  of  Jesse   Lazier.     William 

BUAUEN," 

The  note  was  given  for  part  of  the  i)urc-liape  money  of  certain 
real  estate  situated  in  Ma(iison  county.  The  land  was  owned 
by  the  plaintiff,  and  the  sale  was  made  througli  Braden,  and 
the  note  was  taken  payable  to  the  order  of  Braden,  for  the  plain- 
tiff's benefit. 

On  tlie  twenty-first  day  of  March,  1874,  the  defendant,  who  is 
a  resident  of  Madison  county,  went  to  B.  F.  Allen's  bank  to  pay 
the  note.  The  note  was  not  at  the  bank,  and  the  defendant  de- 
posited the  amount  rccjuired  to  pay  the  same,  to  wit,  $1,512.50, 

319 


ILL.   CAS.  PRESENTMENT    FOR    PAYMENT.  [CH.  X. 

and  took  from  the  bank  a  deposit  ticket,  of  which  the  following  is 
a  copy: 

''  B.  F.  Allen's  Bank. 

"  To  Timothy  Horan.    Des  Moines,  March  21,  1874.    Currency 

to  pay  note  favor  William  Bradeu  for     -         -  -         $1,250  00 

Interest -              262  50 


Duplicate."  $1,512  50 

Some  efforts  were  made  by  the  defendant,  by  way  of  corre- 
spondence through  Percival  &  Hatton,  real  estate  agents  at  Des 
Moines,  to  have  the  note  sent  to  the  bank,  but  they  were  unavail- 
ing. The  money  thus  deposited  remained  with  the  bank,  and  on 
the  nineteenth  day  of  January,  1875,  the  bank  and  B.  F.  Allen 
failed,  and  it  does  not  appear  from  the  evidence  what,  if  any- 
thing, will  be  realized  on  account  of  said  deposit.  That  it  is  a  total 
loss  does  not  seem  to  be  seriously  disputed. 

We  are  required  to  determine  whether  the  foregoing  facts  are 
a  defense  to  an  action  on  the  note,  or,  in  other  words,  where  a 
note  is  made  payable  at  a  bank,  and  the  maker  deposits  the 
amount  necessary  to  fully  discharge  it,  and  leaves  the  same  there, 
and  the  bank  afterwards  fails,  is  such  deposit  a  complete  defense 
to  an  action  by  the  payee  or  indorsee  against  the  maker? 

It  is  well  settled  that  as  to  the  acceptor  of  a  bill  of  exchange  or 
the  maker  of  a  promissory  note,  payable  at  a  bank  or  other 
specified  i)lace,  no  presentment  nor  demand  of  payment  need  be 
made  at  the  specified  place  to  entitle  the  holder  to  maintain  an 
action  against  the  maker  or  acceptor.  Story  on  Promissory  Notes, 
§  228  ;  1  Daniel  on  Negotiable  Instruments,  §  643 ;  1  Parsons  on 
Notes  and  Bills,  i308 ;  Wallace  v.  McConnell,  13  Peters,  136; 
Fitler  v.  Beckley,  2  Watts  &  Serg.  458  ;  Armstead  v.  Arrastead, 
10  Leigh,  525. 

In  Parsons  on  Notes  and  Bills  it  is  said:  "  The  courts  in  this 
country  have,  with  the  exception  of  Louisiana  and  Indiana,  held 
that  such  acceptances  were  not  conditional ;  that  demand  need 
not  be  averred  by  the  plaintiff,  but  that  if  the  acceptor  was  at  the 
place  at  the  time  designated,  and  ready  to  pay  the  money,  it  was 
matter  of  defense  to  be  pleaded  on  his  part,  which  defense,  how- 
ever, is  no  bar  to  the  action,  but  goes  only  in  reduction  of 
damages  and  in  prevention  of  costs." 

That  the  maker  of  a  promissory  note,  and  the  acceptor  of  a 
bill  of  exchange  payable  at  a  particular  place,  are  under  the  same 
obligation  in  this  respect,  and  their  rights  and  liabilities  are  the 
same,  seems  also  to  be  well  established.  See  the  authorities 
above  cited.  W^hat  are  the  rights  of  the  [)artie3,  however,  where 
the  maker  of  a  note  or  the  acceptor  of  a  bill  deposits  the  money 
in  the  bank  designated  as  the  place  of  payment,  and  leaves  it 
there,  is  another  question,  upon  which  there  is  a  surprising  paucity 
of  adjudicated  cases.  The  learned  counsel  for  the  respective  parties 
in  this  cause  have  cited  us  to  no  case  which  is  exactly  in  point. 

320 


CH.  X.]  PRESENTMENT    FOU    PAYMENT.  ILL.   CAS. 

It  is  true  that  in  Wallace  v.  MeConnell,  supra,  there  is  lan- 
guage used  from  which  it  may  fairly  be  implied  that  in  such  case, 
if  the  holder  of  the  note  or  bill  should  neglect  to  present  it  at 
the  specified  place,  by  reason  of  which  the  money  should  be  lost 
by  the  failure  of  the  bank  or  the  like,  this  wou'd  be  a  defense; 
and  in  Armstead  v.  Armstead,  supra,  it  is  said  "  th;it  the  maker, 
if  he  was  ready  at  the  time  and  place  to  make  the  payment,  may 
plead  the  matter  in  bar  of  damnges  and  costs;  but  he  must  at 
the  same  time  bring  the  money  into  court  which  the  plaintiff  will 
be  entitled  to  receive.  A  further  consequence,  indeed,  might 
follow  if  nny  loss  had  been  sustained  by  his  failure  to  present, 
but  th's  must  be  set  up  as  matter  of  defense.  In  Fitler  v.  Beck- 
ley,  supra,  Houston,  J.,  said:  "I  incline  to  the  opinion  in  13 
Peters,  144,  as  above,  that  if  the  maker  or  acceptor,  where  the 
money  is  payable  at  a  bank,  pays  the  monej'  into  the  bank,  to  the 
credit  of  the  paj'^ee  on  such  note  or  1)ill,  and  leaves  it  there,  it  will 
be  a  complete  discharge,  though  the  money  should  be  lost  by 
robbery  of  the  bank  or  otiierwise ;  ])ut  this  case  does  not  call  for 
an  opinion  of  the  court  on  this  point." 

In  Nichols  V.  Pool,  2  Jones  (L.)  N.  C  ,  in  discussing  the  ques- 
tion whether  a  demand  at  the  place  of  |)a3'ment  is  necessary  to 
maintain  the  action,  it  is  snid  :  "The  more  reasonable  construc- 
tion that  they  (the  words  '  payable,'  etc.)  were  used  to  convey 
the  idea  that  the  parties  had  m;ide  an  arrangement,  suggested  by 
Cf)nsiderations  of  convenience  to  both  sides,  according  to  which 
the  money  is  to  be  paid  at  a  particular  place,  on  a  given  day ;  or, 
in  other  words,  assurance  given  by  the  debtor,  and  accepted  by 
the  creditor,  that  the  money  will  be  then  and  there  ])aid.  *  *  * 
Considered  in  this  sense  the  effect  is  thut  the  creditor  does  not 
lose  his  debt  by  failing  to  apply  for  it  at  the  i)reci3e  time  and  place, 
but  may  afterwards  recover  it;  while,  on  the  other  hand,  the 
debtor  may,  if,  in  fact,  he  bad  the  money  at  tlie  time  and  place, 
use  that  as  a  defense  and  defeat  the  action  by  bringing  the  money 
into  court,  or,  if  he  deposited  it,  and  it  was  lost  by  the  failure  of 
the  bank,  he  can  put  the  loss  on  the  creditor,  because  of  his 
laches  in  not  cal  ing  to  get  it." 

In  Rhoades  v.  Gent,  5  B.  &  A.  244,  language  to  the  same 
effect  is  used  in  the  opinion  of  one  of  the  judges.  An  examina- 
tion of  these  cases  will  show  that  the  question  of  the  rights  of  the 
parties  where  there  has  been  actual  dei)Osit  made  by  the  maker 
or  acceptor,  is  not  directly  involved.  Tlicy  are  all  cases  upon 
the  question  as  to  whether  an  action  may  be  maintained  with-)ut 
a  demand  having  been  made  at  the  jilace  of  ))avmcnt.  The  lan- 
guage which  we  have  quoted  is,  however,  germane  to  the  question 
which  was  before  the  courts  in  the  several  cases  involving  the  rights 
of  the  parties  to  written  instruments  of  this  character,  and,  if 
nothing  more,  serves  to  indicate  the  views  of  the  learned  writers 
of  the  opinions  cited. 

In  Story  on  Promissory  Notes,  §  228,  this  language  is  used : 
"If,  by  such  omission  or  neglect  of  i)resentment  and  demand, 

21  321 


ILL.   CAS.  PRESENTMENT    FOR    PAYMENT.  [CH.  X. 

he  (the  maker  or  acceptor)  has  sustained  any  loss  or  injmy,  as 
if  the  bill  or  note  were  payable  at  a  bank,  and  the  acceptor  or 
maker  had  funds  there  at  the  time,  which  have  been  lost  by  the 
failure  of  the  bank,  then  and  in  such  case  the  acceptor  or  maker 
will  be  exonerated  from  liability  to  the  extent  of  the  loss  or 
injury  fo  sustained."  To  the  same  effect  see  Story  on  Bills  of 
Exchange,  §  356  ;  1  Parsons  on  Contracts,  272-3  ;  Daniell  on 
Negotiable  Instruments,  §  643. 

It  is  correct  as  claimed  by  counsel  for  appellee  that  these 
writers  cite  no  authority  which  supports  the  proposition  an- 
nounced by  them.  But,  notwithstanding  this,  the  views  of  these 
learned  authors  are  entitled  to  proper  consideration.  On  the 
other  hand,  no  case  has  been  cited  whicti  announces  the  opposite 
view  from  that  given  in  the  above  citations.  With  the  limited 
time  at  our  disposal,  we  are  unable  to  make  an  exhaustive 
search  for  authorities  and  in  this  case  we  have  found  none  which 
are  fairly  in  point.  In  Rowland  v.  Levy,  14  La.  Ann.  223,  it 
was  held,  when  a  note  was  payable  at  the  office  of  a  commercial 
firm  in  New  Orleans,  and  at  maturity  it  was  presented  by  the 
holder  at  the  place  named  for  payment,  and  payment  refused, 
and  a  few  days  after  maturity  the  maker  remitted  part  of  the  sum 
to  the  mercantile  firm  to  be  applied  on  the  note,  that  this  was  no 
payment.  It  will  b  ;  observed  from  this  statement  that  the  case 
is  wholly  different  frcmi  that  at  bar.  Here,  if  the  note  had  been 
presented  at  maturity.  It  would  have  been  paid,  for  Ihe  money 
was  in  the  bank  for  that  very  purpose.  It  would,  perhaps,  be  an 
unreasonable  requirement  to  hold  that  the  holder  of  the  note  or 
bill  should  present  it  ag:iin  for  ])ayment. 

We  think  tliat,  upon  princi[)Ie,  the  defendant  in  this  case  should 
be  wholly  discharged,  and  we  will  briefly  state  our  reasons  there- 
for. The  note  was  made  payable  at  a  bank.  These  institutions 
are  depositories  of  money.  They  are  also  collection  agencies, 
througli  which  by  much  the  larger  part  of  that;  branch  of  the  busi- 
ness of  the  country  is  transacted.  When  a.  note  is  made  payalile 
at  a  bank  the  parties  expect  the  colh  ction  to  be  made  through 
the  bank.  It  is  true,  when  the  defendant  deposited  the  mone}' 
the  bank,  while  holding  it,  was  technically  the  agrnt  of  the  de- 
positor. But  the  money  was  deposited  for  the  holder  of  the  note, 
and  it  required  no  act  of  the  depositor  to  authorize  the  bank  to 
pa}'^  the  note.  "  If  the  customer  of  a  banker  accept  a  bill  and 
make  it  payable  at  h  s  banker's,  that  is  of  itself  a  sufficient 
authority  to  tho  banker  to  apply  the  customer's  funds  in  l>aying 
the  bill."  Byles  on  Bills,  151.  And  if  money  be  deposited  for 
the  payment  of  such  a  bdl  or  note  the  holder  may  maintain  an 
action  against  tiie  bank  therefor.  Parsons  on  Common  Law,  130. 
By  the  very  terms  of  the  contract  the  defendant  agreed  to  pay 
the  note  at  the  bank.  Now,  while  it  is  a  general  rule  that  pay- 
ment of  a  note  or  bill  should  be  made  to  the  actual  holder,  yet 
when  the  parties  have  contracted  thut  payment  may  be  made  at  a 
bank  it  means  that  payment  is  to  be  made  at  the  bank.  'J'he 
322 


CH.  X.]  PRESENTMENT    FOR    PAYMEJIT.  ILL.   CAS. 

parties  lo  this  note  did  not  contemplate  tliat  the  payee  should 
make  a  journey  from  Indianapolis  and  meet  the  maker  at  Allen's 
bank,  and  tliere  receive  his  money  from  the  hands  of  the  maker 
and  deliver  liim  tlie  note. 

This  court  has  tliree  times  determined  that  when  the  maker 
of  a  promissory  note,  payable  in  personal  property,  to  be  delivered 
nt  a  specified  time  and  i)lace,  makes  a  tender  of  the  specific 
articles  and  sets  them  apart  at  the  time  and  place  slipuljted,  and 
the  creditor  is  not  there  to  receive,  or  refuses  to  accept,  the 
property,  the  debt  is  thereby  discharged  and  the  title  to  the 
property  passes  to  the  creditor.  Gaines  v.  Manney,  2  Green, 
251;  Williams  r  Triplett,  3  Iowa,  518  ;  State  v.  Shiipe,  16  Iowa, 
36.  Now,  while  it  is  h<  Id  in  these  cases,  that  upon  designating 
the  pro[)erty  and  settii  g  it  apart  for  the  creditor  tlie  title  of  the 
property  passes,  and,  it  may  be  said,  that  by  the  deposit  of  the 
money  in  the  bank  for  the  holder  the  right  of  property  in  the 
money  does  not  pass,  because  the  depositor  jiiay  withdraw  it,  yet 
this  distinction  is  really  not  an  important  one,  for,  as  we  have 
seen,  if  the  money  remains  on  deposit,  the  holder  of  the  note 
may  present  his  note  and  take  the  money,  or,  if  necessar}'^,  main- 
tain an  action  for  it.  In  one  of  the  cases  cited  the  note  provided 
for  i)ayment  in  brick.  Now,  if  that  could  be  discharged  by  deliv^- 
ering  the  brick  set  apart  for  the  creditor  at  the  time  and  place 
designated,  it  is  difficult  to  see  why,  if  the  note  was  payable  iu 
dollars,  it  would  not  equally  be  a  discharge  to  set  apart  and  de- 
posit the  dollars  for  the  holder  of  the  note. 

In  our  opinion  there  should  have  been  a  judgment  for  the 
defendant  for  costs,  and  the  mortgage  should  have  been  canceled, 
as  prayed  in  the  answer.     Reversed. 


Non-nejfotial)lo  Iiistriiiuciit  —  Proseiitinoiit  for  Paj'- 
iiieiit  Uuucccssary. 

Smith  V.  Cromer,  G6  Miss.  157  (5  So.  G19). 

Appeal  from  circuit  court,  Jackson  county ;  S.  H.  Terral, 
Judge. 

This  is  a  proceeding  by  attachment.  The  affidavit  alleged  an 
indebtedness  by  l>ouis  Cromer,  l)ut  the  declaration  was  against 
Louis  Cromer  and  several  otlier  namt  d  peisons,  "  doing  business 
under  the  firm  name  of  Louis  Cromer." 

The  following  is  the  instrument  sued  on : — 

"$365.74.  Moss  Point,  April  16,  188.S. 

'•Received  on  board  schooner  Robeit  Delmas,fr<>m  E.  B.  Smith, 
2,244  i)arrels  of  charcoal,  for  which  I  promise  to  pay  to  the  order 
of  John  J.  Driscoll,  at  New  Orleans,  the  sum  of  S365.74. 

"  Louis  Ckomek,  Master." 

The  schooner,  with  the  charcoal  on  board,  ran  on  a  bar  and 
sunk,  and,  the  defendant  having  lirst  promised   to  turn  over  the 

323 


ILL.   CAS.  PRESENTMENT    FOR    PAYMENT.  fcH.  X. 

schooner  and  cargo  in  settlement  of  the  indebtedness,  and  after- 
wards having  refused  to  do  that,  or  to  make  any  other  satisfac- 
tory agreement  about  payinoj  the  indebtedness,  this  attachment 
was  sued  out  and  levied  on  the  schooner  and  cargo.  The  defend- 
ant Louis  Cromer  |>leaded  that  the  debt  was  not  due  when  the 
attachment  was  sued  out,  and  the  other  defendants  pleaded  that 
tljey  did  not  make  the  writing,  and  that  they  were  not  partners 
with  Louis  Cromer,  and  did  not  promise,  etc.  On  the  trial  the 
court  refused  to  admit  evidence  that  the  defendants  other  than 
Louis  Cromer  were  liable  for  the  debt,  for  the  reason  that  the 
attachment  had  only  been  sued  out  against  him  ;  said  the  court 
instructed  the  jury  to  find  for  the  defendant,  because  the  "  bill 
of  exchange  for  the  debt  sued  on  was  given  payable  to  John  J. 
Driscoll,  at  New  Orleans,  La.,  and  no  demand  was  ever  made 
for  the  payment  of  the  bill  of  exchange  by  any  person  entitled  or 
authorized  to  make  such  demand."  Judgment  was  rendered 
against  Smith,  and  he  appeals. 

Campbell,  J.  The  plaintiff  should  have  been  allowed  to  show 
by  evidence  the  liability  of  the  defendants  other  than  Louis 
Cromer.  They  had  pleaded,  and  their  liability  was  the  question 
at  issue  as  between  them  and  the  plaintiff.  The  action  of  the 
court  on  the  instructions  was  erroneous.  The  instrument  sued 
on  is  not  a  bill  of  exchange.  It  was  not  necessary  for  it  to  be 
presented  in  New  Orleans  for  ]ia3anent.  The  plaintiff  certainly 
showed  himself  entitled  to  a  verdict  against  Louis  Cromer,  and 
proposed  to  show  the  liability  of  the  other  defendants,  who  had 
pleaded  to  his  declaration,  and  denied  liability,  and  the  court 
denied  him  the  right  to  show  this.  If  any  objection  could  have 
been  made  by  the  defendants  who  were  not  embraced  by  name 
in  the  attachment,  they  waived  it  by  pleading  to  the  action. 

Reversed  and  remanded. 


Time  of  Presentment  —  Acceleration  of  Time  of  Matu- 
I'ity  —  Foreclosure  of  Mortgagee,  given  to  secure 
Notes  —  What  Law  Controls  Construction  of  Notes. 

Guignon  v.  Union  Trust  Co.,  156  IlL  135  (40  N.  E.  556). 

Appeal  from  appellate  court.  Fourth  district. 

Bill  by  the  Union  Trust  Company  and  and  others  against  Emile 
S.  Guignon  and  others  to  foreclose  a  mortgage.  Complainants 
obtained  a  decree,  which  was  modified  by  the  appellate  court. 
53  ]11.  App.  681.     Defendants  appeal.     Affirmed. 

This  was  a  bill  in  equity  brought  in  the  circuit  court  of  St. 
Clair  county,  to  foreclose  a  mortgage.  Upon  a  hearing  in  the 
circuit  court,  on  the  answer,  replication,  and  the  evidence,  a 
decree  was  rendered  in  favor  of  the  complainants  in  the  bill, 
which,  on  appeal,  was  affirmed  in  the  appellate  court. 

The  opinion  of  the  a})pellate  court  is  as  follows :  — 

"  This  was  a  suit  brought  by  the  Union  Trust  Company,  trustee, 

324 


en.  X.]  PRESENTMENT   FOR   PAYMENT.  ILL.  CAS. 

William  H.  Alley,  John  B.  Logan,  Charles  A.  Mair,  and  the  exec- 
utors of  the  last  will  of  Josephus  Collett,  deceased,  against  Eraile 
S.  Guignon,  of  St.  Louis,  Mo.,  and  others  to  foreclose  a  mortgage 
executed  by  Guignon  to  secure  tlie  purchase  money  of  the  lands  in 
said  mortgage  described, amounting  to  SCO, 000, evidenced  by  his  six 
principal  promissory  notes  for  S(J,GGG.66f  each,  and  notes  for  the 
interest  tliereon,  in  favor  of  said  Collett,  and  three  principal  notes 
for  the  same  sum  each,  and  notes  for  the  interest  thereon  in  favor 
of  Emily  C.  Lyon.  Three  of  said  nine  principal  notes  matured 
March  18,  1892  ;  three  March  18,  1893  ;  and  the  remaining  three, 
March  18,  1894.  Tlie  princii)al  and  interest  notes  maturing 
March  18,  1892,  and  the  interest  notes  maturing  September  18, 
1892,  were  paid  at  maturity.  Five  of  the  unpaid  Collett  notes 
were  undisposed  of  when  he  died,  and  were  held  by  his  execu- 
tors; and  the  remaining  unpaid  five  notes  he  sold  to  complainant 
Alley,  two  of  which,  maturing  March  18,  1893,  were  protested 
by  Scudder,  notary.  P^mily  C.  Lyon  sold  the  five  unpaid  notes 
payable  to  her  to  complainant  Mair,  before  maturity.  The  prin- 
cipal note,  due  March  18,  1893,  and  the  note  for  interest  thereon, 
due  on  s  ime  date,  for  $400,  were  protested  by  Carr,  notary;  and 
complainant  Lyon,  after  the  protest,  bought  them  of  Mair,  be- 
cause L3-on  had  guaranteed  their  payment.  The  remaining  three 
of  said  unpaid  notes  are  held  and  owned  by  Mair.  Damages  of 
4  per  cent  on  the  amount  of  the  protested  notes  were  asked  for 
in  the  bill,  by  virtue  of  the  provisions  of  the  Missouri  statute  set 
out  at  length  therein.  The  mortgage  provides  that  compensation 
shall  be  made  to  the  trustee  for  all  services  rendered,  and  also 
that  the  mortgagor  agreed  to  pay  all  expenses,  fees,  and  charges 
of  the  said  trust  company  in  executing  the  trust.  The  bill  also 
prays  for  an  accounting  and  payment  of  the  amount  which,  under 
the  bill  and  mortgage  (macle  part  thereof),  may  be  found  due 
upon  an  account  stated.  'J"he  cause  was  heard  b}'^  the  court  upon 
the  bill,  answer,  and  evidence,  all  the  defendants  except  August 
Gehner  appearing;  and  as  to  him  the  court  found  it  had  jurisdic- 
tion, and  he,  having  failed  to  answer,  the  bill  was  taken  as  con- 
fessed by  him.  The  court  found  all  the  material  allegations  of 
the  bill  were  true,  setting  out  the  findings  specifically,  and  also 
that  the  Union  Trust  Company,  complainant,  was  entitled  to 
S2,650  as  a  reasonable  compensation  for  its  services  and  the 
necessary  expenses  incurred  by  it  in  and  about  the  execution  of 
the  trust  and  referred  the  cause  to  the  master  to  compute  the 
amount  due  each  of  the  complainants,  in  view  of  the  findings  and 
the  several  notes  which  are  part  of  the  recoid;  and  the  decree 
then  further  lecites  that  on  the  21st  of  December  the  master  pre- 
sented his  report,  finding  $6,986.83  duecomplainant  ]Mair,S7, 720.- 
33^  due  complainant  Lyon,  $14,707.16  dneconi|)lainant  Allev,  and 
$14,424.  oO  to  complainant  executors  Jump  and  Bot^art,  and  ap- 
proves said  report,  and  thereupon  decrees  that  defendant  Emile 
S.  Guignon,  within  35  days  from  date  of  decree,  pay  each  of  said 
parties  the  sum   so   due  to  each  respectively,  with  5  per  cent 

325 


ILL.  CAS.  PRESENTMENT   FOR   PAYMENT.  [CH.  X. 

interest  from  date  of  decree  upon  all  except  said  sum  of  $2,650, 
which  shall  be  taxed  and  included  as  costs.  Decree  then  pro- 
vides for  sale  of  mortgaged  premises  in  case  of  default,  subject 
to  redemption. 

"  Defendants  appealed,  and  bring  up  the  record  to  this  court. 
The  following  errors  are  assigned:  (1)  The  decree  is  against 
the  law  and  the  evidence.  (2)  The  decree  is  for  too  large  an 
amount.  (3)  The  court  erred  in  allowing  4  per  cent  damages, 
under  the  laws  of  Missouri,  to  Alley  and  Lyon.  (4)  The  court 
erred  in  allowing  $400  to  the  Union  Trust  Company  for  services, 
there  being  no  evidence  to  support  such  allowance,  nor  prayer  in 
the  bill.  (5)  The  court  erred  in  allowing  the  Union  Trust  Com- 
pany $2,250  for  solicitor's  fees.  The  amount  is  excessive,  and 
there  is  no  provision  in  the  mortgage  nor  prayer  in  the  bill  to 
that  effect.  (6)  The  court  erred  in  allowing  the  Union  Trust 
Company  $2,650  for  services  and  expenses  incurre<l  in  the  execu- 
tion of  tlie  trust,  as  a  part  of  the  decree  and  costs.  And,  for  other 
errors  apparent  in  the  record,  appellants  pray  for  a  reversal,  etc. 

"Under  these  assignments,  it  is  first  objected  that  the  master 
improperly  allowed  interest,  in  his  computation,  upon  the  three 
principal  uoles  for  $6,666.66|  each,  maturing  March  18,  1894, 
from  September  18,  1893,  to  December  18,  1893,  the  date  of 
decree.  These  three  notes,  by  their  terms,  were  not  due  until 
March  18,  1894,  but  because  of  the  default  in  not  paying  the 
notes  due  March  18,  18'J3,  became  due,  together  with  accrued 
interest,  by  tlie  terms  of  the  mo:tgage,  if  the  holders  elected 
to  dfclare  them  due,  which  tliey  did.  The  interest  notes  last 
matured  for  the  interest  of  these  three  ])rincipal  notes  became  due 
March  18,  1893,  and  were  allowed  in  the  computation ;  but  the 
accruing  interest  on  the  principal  from  that  date  up  to  tlie  date  of 
the  decree  was  a'so  equitably  due  tlie  holders  of  said  notes,  and 
was  properly  included  in  the  computation  made  byt'ie  master. 
It  is  true,  interest  notes  maturing  March  18,  1894,  were  given, 
which  would  include  and  cover  interest  accruing  for  the  period 
mentioned  ;  but  these  notes  were  not  figured  in  said  computation, 
although  offered  in  evidence,  aid  eacli  contained  this  clause: 
'This  is  an  interest  note,  suliject  to  reduction  or  total  defeasance, 
depending  on  payment  on  principal  notes.'  With  such  notice  on 
the  face  of  each,  it  is  quite  improbable  they  could  be  sold  to  a 
purchaser  for  value,  and  if  negotiated,  there  being  nothing  due 
thereon  above  the  accruing  interest  so  computed  and  tdlowed,  no 
recovery  could  be  had. 

"It  is  also  objected  that  the  court  erroneously  allowed  4  per 
cent  damages  to  con?i)lainants  Alley  and  Lyon  on  protested  notes 
claimed  in  the  bill  to  be  due  by  virtue  of  the  statute  of  Missouri. 
The  mortgage  notes  held  by  Alley  so  protested  were  payable  to 
Josephiis  Collett,  one  for  $6,666  66|,  the  other  for  $400,  both 
due  March  18,  1893,  protested  March  21,  1893,  by  William  H. 
Scudder,  Jr.,  protest  signed  '  Wm.  H.  Scudder,'  sworn  to  bj' 
'  Wm.  H.   Scudder,  Jr.;'  and  it  is  insisted  that  the  variance  in 

326 


CH.  X.]  PRESENTMENT    FOR   PAYMENT.  ILL.  CAS. 

the  name  of  the  notary  is  fatal,  and  that  Wm.  H.  Scudder,  Jr., 
named  in  Ihe  body,  and  who  swears  to  it,  may  be  a  different  per- 
son from  the  Wm.  II.  Scudder  who  signs  it.  In  our  judgment, 
the  omission  of  tlie  addition  '  Jr.,'  in  the  one  instance,  does  not 
justify  the  iufennce  that  two  different  persons  ofiiciated  iu  the 
protest, — one  making  it,  and  swearing  to  the  fact;  the  other 
signing  the  tertiticate.  Wm.  H.  Scudder  and  Wm.  11.  Scudder, 
Jr.,  were  evidently  one  and  the  same  person,  and  tlie  court 
properly  so  hehl. 

"It  is  next  insisted  that  the  protests  are  insufficient  to  entitle 
the  complainant  owners  of  the  protested  paper  to  recover  the  4 
per  cent  damages  allowed  by  the  Missouri  statute,  for  the  reason 
no  demand  was  made  on  Guignon,  nor  was  any  notice  given  him 
of  the  dishonor  of  the  paper.  The  payment  was  demanded  at  the 
otfice  of  the  Uiiion  Trust  Company  in  St.  Louis,  which  was  the 
place  the  notes  were,  by  the  terms  thereof,  to  be  paid.  Other 
demand  upon  the  maker  was  not  required;  nor  washeentithd 
to  notice  of  dishonor.  He  was  a  primary  debtor,  not  an  indorser. 
2  Daniels  Neg.  Inst.  (1st  ed.),  p.  47,  §  995;  Donuell  v.  Bank, 
80  INIo.  172. 

"It  is  next  insisted  that  the  notes  and  mortgage  are  Illinois 
contracts,  are  and  not  within  the  operation  of  the  Missouri  statute, 
allowing  damages  of  4  per  cent  upon  the  principal  sum  of  a  note  duly 
presented  for  payment  and  protested  for  nonpayment.  The  mort- 
gage recites  tiuat  Eraile  S.  Guignon,  the  mortgagor,  of  St.  Louis, 
Mo.,  mortgages  an(l  warrants  to  the  Union  Trust  Company,  of 
St.  Louis,  Mo.,  trustee,  the  land  described  iu  the  bill.  All  the 
notes  were  dated,  executed,  and  made  payable  at  the  olllcc  of 
said  trust  company  in  St.  Louis.  Hence  the  place  fixed  for  the 
performance  of  the  contracts  was  St.  Louis,  and  the  notes  are 
to  be  held  Missouri  contracts,  and  subject  to  the  provisions  of 
said  statute.     Land  Co.   v.  Rhodes,  54  Mo.  App.  129. 

"  It  is  further  contended  that  the  notes  protested  were  in- 
dorsed by  the  payee  in  blank,  and  Iu  Id  by  other  parties  at  time 
of  protest,  not  com|)lainants  in  the  bill,  and  wlio  wore  then  prima 
facie  owners  thereof,  and  therefore  they,  and  not  complainants 
Lyon  and  Alley,  were  alone  euLilkd  to  the  4  per  cent  damages. 
The  evidence  of  Lyon  and  Alley  establishes  the  fact  of  their 
owner^hii)  of  all  of  said  notes  as  alleged  in  the  bill,  and  they,  as 
such,  had  the  right  to  recover  the  damages  allowed  them,  re- 
spectively, for  nonp:iym(.nt  and  protest.  The  indorsement  in 
blank  was  not  intended  to  and  did  not  vest  the  title  of  said  pro- 
tested notes,  or  either  of  them,  in  the  Union  Trust  Comi)any  or 
State  Bank  of  St.  Louis. 

"It  is  al.^o  insisted  that  the  protests  of  the  two  Lyon  notes, 
protested  by  Carr,  are  void,  because  the  certificates  of  protest  are 
not  verified  by  las  adidavit.  The  record  shows  they  were  so 
verified,  and  counsel  for  ajjpellant  are  also  mistaken  in  their 
statement  that  it  is  not  alleged  in  tlie  bill  that  the  notes  were  pre- 
sented at  the  place  where  they  were  to  be  paid. 

327 


ILL.  CAS.  PRESENTMENT   FOR   PAYMENT.  [CH.  X. 

"It  is  further  objected  that  as  the  notes  were  due  March  18th, 
and  the  demand  was  made  for  payment  on  March  21st,  and  pro- 
tested on  same  day,  and  three  days'  grace  being  allowed  by  the 
law,  the  protest  was  premature.  In  each  certificate  of  protest  it 
is  recited  that  the  notary  presented  the  note  during  the  business 
hours,  at  the  oflice  of  the  Union  Trust  Company,  St.  Louis,  Mo. 
(the  place  of  payment),  on  March  21,  1893,  and  demanded  pay- 
ment, wliich  the  maker  refused.  In  Cook  v.  Renick,  19  111.  598, 
it  was  held  that,  in  the  absence  of  statutory  provision  to  the  con- 
trary, a  bill  presented  for  payment  on  tlie  last  day  of  grace  was 
presented  in  proper  time.  In  the  case  of  Bank  v.  Barksdale,  36 
Mo.  673,  it  is  said:  '  It  seems  to  be  clearly  established  by  the 
general  cunent  of  authority  that  the  protest  must  be  made  on  the 
same  day  the  presentment  and  demand  was  made.  We  think, 
under  the  proof,  the  demand  was  made  at  the  proper  time,  and 
the  protest  on  the  same  day  was  not  premature.' 

"The  allowance  of  $2,250  sohcitor's  fees,  and  $400  for  ser- 
vices of  trustee,  to  be  taxed  as  costs,  is  assigned  for  error.  It  is 
provided  in  the  mortgage  that  compensation  shall  be  made  to  the 
trustee  for  all  services  rendered  and  that  the  mortgagor  agrees  to 
pay  all  expenses,  fees,  and  charges  of  the  said  trust  company  in 
executing  this  trust;  and  it  is  so  alleged  in  the  bill,  and  it  is 
prayt'd  that  an  accounting  be  made,  and  for  payment  of  whatever 
may  be  found  due  complainants  under  the  allegations  of  the  bill. 
In  the  absences  of  these  clauses  of  the  mortgage,  the  trustee 
would  be  entitled  to  its  reasonable  expenses  incurred  in  the  exe- 
cution of  the  trust,  and  all  such  expenses  are  a  lien  upon  the 
mortgaged  premises.  Perry  Trusts,  §  910.  But,  with  the  pro- 
visions mentioned  contained  in  the  mortgage,  there  can  be  no 
doubt  that  the  necessary  and  reasonable  solicitor's  fees  and  rea- 
sonable compensation  to  the  trustee  for  services  were  intended  to 
be  provided  for,  and  made  a  lien  upon  the  land.  The  purpose 
was  to  secure  to  the  mortgagees  the  payment  in  full  of  the  prin- 
cipal and  interest  due  them,  exempt  from  any  expense  for  col- 
lecting the  same  by  law  or  in  payment  of  the  trustee's  expenses 
and  services  in  the  execution  of  the  trust.  To  collect  the  mort- 
gage debt,  this  jtroceeding  in  chancery  became  necessary,  and 
the  services  of  solicitors  were  required.  Evidence  was  heard  by 
the  court  showing  that  the  amount  allowed  for  such  services  and 
for  compensation  of  llie  trustee  was  reasonable,  and  we  do  not 
feel  justified  in  holding  that  it  was  excessive,  or  unreasonable. 

"  It  was  error  to  compute  damages  on  the  interest  due  at  the 
date  of  the  decree,  and  order  that  they  be  paid  ;  but  appellees 
have  entered  a  remittitur  for  the  amount  thereof,  and  cured  the 
error.  The  decree  is  therefore  modified  by  deducting  from  the 
amount  alUowed  by  the  court  below  the  amount  of  the  remittitur, 
and  decreeing  that  the  balance  be  paid;  and,  as  so  modiQed,  the 
decree  is  affirmed.     Affirmed." 

Craig,  J.  We  concur  in  the  judgment  of  the  appellate  court, 
and  it  will  only  be   necessary  to  add  a  few  words  in  addition  to 

328 


CH.  X.]  PRESENTMENT   FOR   PAYMENT,  ILL.  CAS. 

what  is  said  by  that  court.  It  is  insisted  in  the  argument  that 
the  appellate  court  erred  in  aflirmino^  that  part  of  the  decree 
wherein  4  per  cent  damages  were  allowed  on  the  protest  of  a 
note  as  provided  for  by  the  statute  of  Missouri,  as  construed  by 
the  supreme  court  of  that  State  in  Clark  v.  Schneider,  17  Mo. 
296,  and  other  cases.  In  support  of  this  pisition,  reliance  is 
placed  on  section  8,  c.  74,  ]>.  878,  Hurd's  Rev.  St.:  "When  any 
written  contract  wherever  payable  shall  be  made  in  this  State,  or 
between  citizens  or  corporations  of  this  Slate,  or  a  citizen  or  cor- 
poration of  this  State  and  a  citizen  or  corporation  of  any  other 
State,  territory,  or  country  (or  shall  be  secured  by  mortgage 
or  trust  deed  on  lands  in  this  State),  sucii  contract  may 
bear  any  rate  of  interest  allowed  by  law  to  be  taken  or  con- 
tracted for  by  persons  or  cori)orations  in  this  State,  or 
which  is  or  may  be  allowed  by  law  on  any  contract  for  money  due 
or  owing  in  this  State.  *  *  *  "  We  do  not  think  this  section 
of  the  statute  controls  the  question  involved.  Here  the  contract 
was  made  iu  Missouri,  and  was  payable  in  that  State,  and  the 
right  to  recover  the  damages  on  the  protest  of  the  note  depends 
upon  whether  the  notes  are  to  be  construed  according  to  the  laws 
of  Illinois  or  the  laws  of  Missouri.  If  the  latter,  then  the  dam- 
ages were  properly  allowed.  In  .Jones  on  Mortgages  (ed.  1894, 
vol.  1,  §  0.57)  the  author  says:  "The  validity  of  a  contract 
secured  by  a  mongage  made  iu  one  State  upon  lands  in  another 
State  depends,  so  far  as  the  usury  laws  affect  it,  upon  the  ques- 
tion, by  the  law  of  which  State  is  the  contract  itself  governed? 
If  the  loan  is  to  be  repaid  in  the  State  where  it  is  made,  the  con- 
tract will  he  governed  by  ti)e  laws  of  that  State,  even  when 
secured  by  mortgage  of  land  situate  in  another  State."  Section 
660:  "  The  authorities  generally  do  not  regard  the  circumstance 
that  the  loan  is  secured  hy  mortgage  in  determining  wiiether  it  is 
usurious."  Section  ()62:  "  But,  as  to  the  form  and  validity  of  the 
mortgage  deed  as  a  conveyance,  the  law  of  the  place  where  the 
land  is  situated  nuist  always  govern."  In  1  Daniel  Neg.  Inst. 
(ed.  1891),  p.  930,  the  author  (section  918)  says:  "The  rate  of 
interest  wliich  a  bill  of  exchange  or  promissory  note  bears  when 
no  rate  is  specified,  and  the  question  whether  or  not  it  shall  bear 
interest  are  both  determinable  by  the  law  of  the  place  where  it  is 
expressly  or  impliedly  to  be  paid."  Section  921:  "The  rule 
applicalile  to  interest  applies  as  well  to  what  is  distinctly  termed 
'dimages.'  Kvni\\  party,  drawer,  indorser,  and  acceptor,  is 
liable  according  to  tlie  place  where  the  bill  is  drawn,  indorsed,  or 
accepted."  Sections  1,  2,  c.  98,  Hurd's  Rev.  St.,  entitled 
"  Negotiable  Instruments,"  provide  for  the  payment  of  damages 
on  hills  of  exchange  protested  for  non-payment  in  certain  si^eci- 
fied  cases.  This  statute  would  seem  to  indicate  that  the  allow- 
ance of  dtunages  to  the  holder  of  protested  commercial  paper  was 
not  contrary  to  the  policy  of  the  State.  Under  the  authorities, 
we  are  of  ()|iinion  tliat  the  laws  of  Missouri,  where  the  paper  was 
payable,  must  control. 

329 


ILL.   CAS.  PRESENTMENT    FOR    PAYMENT.  [CH.  X. 

Testimony  was  introduced  before  the  master  showing  what  the 
services  of  the  solicitor  were  reasonably  worth  in  the  case,  and 
from  the  evidence  the  master  reported  as  follows:  "  The  master 
further  reports  from  the  evidence  that  a  reasonable  sum  for  ex- 
penses for  attorneys  for  the  trustees  is  $2,250."  The  evidence 
before  the  master  also  showed  that  the  services  of  the  Union 
Trust  Company  were  reasonably  worth  $400.  The  report  of  the 
master  was  approved,  and  the  court  in  its  decree  found  "Ihat 
the  Union  Trust  Company  is  entitled  to  $2,650,  as  a  reasonable 
compensation  for  its  services  and  the  necessary  expenses  incurred 
by  it  in  and  about  the  execution  of  the  said  trust.  Cause  referred 
to  master  for  computation."  Upon  this  linding,  the  court,  among 
other  things,  decreed  "  that,  out  of  the  proceeds  of  the  sale,  the 
master  in  chancery  pay,  first,  the  costs  of  this  suit  and  of  snid 
sale,  including  $2,650  to  said  Union  Trust  Company."  As  has 
been  seen,  the  decree  was  affirmed  in  the  appellate  court;  and  it 
is  insisted  that  the  decision  affirming  the  allowance  of  $2,650  to 
the  Union  Trust  Company  is  erroneous.  It  will  be  observed  that 
the  allowance  of  $2,650  embraced  two  items:  First,  $400,  for  the 
services  of  the  Union  Trust  Company ;  second,  $2,250  to  cover 
reasonable  solicitor's  fees  for  foreclosing  the  moi'tgage.  We  will 
consider  the  two  items  separately. 

As  respects  the  first,  the  deed  of  trust  contains  this  provision : 
"  It  is  agreed  that  the  said  trustee,  under  this  indenture,  shall  be 
entitled  to  a  reasonable  compensation  for  all  services  rendered 
thereunder,  to  be  paid  by  the  said  mortgagor."  Here  is  an 
express  agreement  by  the  mortgagor  to  pay  the  trustee  compen- 
sation for  his  services,  and  the  evidence  shows  that  the  compen- 
sation was  worth  $400  (the  amount  allowed  by  the  (ourt)  ;  and 
we  see  no  reason  why,  under  the  agreement  and  evidence,  the 
allowance  should  be  disturbed.  Appellants'  attorneys  have  cited 
and  rely  on  Heffion  v.  Gage,  149  111.  186;  36  N.  E.  569,  as  an 
authority  sustaining  their  position.  An  examination  of  the 
decision  in  that  case  will  show  that  it  has  no  bearing  on  the  ques- 
tion. In  that  case  the  circuit  court  allowed  a  trustee's  fee,  and 
also  solicitor's  fees ;  but,  on  appeal  to  the  appellate  court,  the 
decree  was  set  a^ide  as  to  the  trustee's  fees,  and  affirmed  in  all 
other  respects.  The  defendants  appealed  to  this  court,  and  we 
affirmed  the  judgment  of  the  appellate  court;  but  the  trustee, 
who  was  defeated  in  the  appellate  court,  assigned  no  cross  errors, 
and  the  ruling  of  the  appellate  court  as  to  his  fees  was  not  called 
in  question,  and  nothing  was  decided  or  said  on  that  subject. 

We  now  come  to  the  question  as  the  amount  allowed  the 
Union  Trust  Company  for  solicitor's  fees.  The  mortgage  contains 
a  provision  for  releasing  portions  of  the  mortgage  property  upon 
certain  payments  being  made,  and  then  follows  this  clause :  "  The 
mortgagor  agrees  to  pay  all  expenses  of  such  releases,  as  well  as 
all  other  fees  and  charges  of  the  said  trust  company  in  executing 
this  trust."  Here  the  Union  Trust  Company,  the  trustee  named 
in  the  mortgage,  was  called  upon  by  the  holders  of  the  mortgage 

330 


CH.  X.]  PRESENTMENT    FOR    PAYMENT.  ILL.  CAS. 

indebtedness  to  foreclose  the  mortgage.  In  order  to  do  this,  it 
was  necessary  for  it  to  employ  solicitors,—  men  skilled  in  that 
department  of  the  law.  The  company  was  not  a  lawyer,  and 
could  not,  without  the  assistance  of  a  solicitor,  forclose  the  mort- 
gage; and  whatever  expense  the  company  incurred  in  foreclosing 
the  mortgage  which  was  reasonable  in  amount  would,  in  our  opin- 
ion, fall  within  the  clause  of  the  mortgage  sui)ra,  providing  for  fees 
and  charges. 

Objection  is  made  to  the  amount  allowed.  The  amount  of  the 
mortgage  foreclosed  wiis  over  $43,000.  The  mortgaged  lands 
had  been  sold  by  the  mortgagor,  and,  in  foreclosing,  care  and 
skill  were  required  in  order  to  secure  a  good  title  under  the  decree 
in  case  no  redemption  was  made.  Under  all  the  circumstances, 
we  are  not  inclined  to  hold  that  the  amount  allowed  was  too  large. 

The  judgment  of  the  appellate  court  will  be  affirmed.     Affirmed. 


Note  "  Payable  at  any  Bank,"  Cannot  be  Presented  at  a 
Loan  and  Trust  Company  to  Hold  Indorser 

Nash  V.  Brown,  165  Mass.  384  (43  N.  E.  180). 

Exceptions  from  superior  court,  Suffolk  county  ;  Albert  Mason, 
judge. 

Action  by  Willard  G.  Nash  against  Charles  H.  Brown,  indorser 
on  a  promissory  note  held  by  plaintiff,  "  payable  at  an}'  bank  in 
Boston."  The  note  was  presented  to  the  Massachusetts  Loan  & 
Trust  Companj',  and  duly  protested.  This  corporation  was 
created  for  the  purpose  of  receiving,  on  deposit,  storage,  or 
otherwise,  moneys,  government  securities,  stocks,  bonds,  coin, 
jewelry,  phite,  valuable  i)apers,  and  documents,  evidences  of 
debt,  and  other  property  of  every  kind,  and  of  collecting  and  dis- 
bursing the  principal  of  such  property  as  produces  interest  or  in- 
come Avheii  it  becomes  due,  upon  terms  prescribed  by  the  corpora- 
tion, and  for  the  purpose  of  advancing  money  or  credits  on  real 
and  personal  security,  on  terms  that  might  be  agreed  upon.  The 
court,  at  defendant's  request,  ruled  that  the  trust  compan}'  was 
not  a  bank,  within  the  contemplation  of  the  contract  set  forth  in 
the  note,  and  that  defendant  could  not  be  held,  to  which  rulings 
plaintiff  excepts.     Ex(  eptiuns  overruled. 

Field,  C.  J.  This  is  an  action  against  an  indorser  on  a  prom- 
issory note  made  "  payal)le  at  any  bank  in  Boston."  The  note 
was  dul^'presi-nted  for  payment  at  the  office  of  the  Massachusetts 
Loan  &  Trust  Company,  in  Boston,  and  was  duly  protested  by  a 
notary  public  for  non-payment.  The  question  is  whether  the 
Massachusetts  Loan  &  Trust  Company  is  a  "  bank,"  as  that  word 
is  used  in  the  jiromissory  note.  The  meaning  of  the  woid 
"  bank  "  has  been  considered  in  Way  v.  Butterworth,  lOG  Mass. 
75  ;  108  Mass.  509.  The  Massachusetts  Loan  &  Trust  Company 
is  a  corporation,  but  it  is  not  a  national  bank,  and  not  a  State 
bank,  within  the  meaning  of  Pub.  St.  c.  118.     It  was  incorporated 

331 


ILL.  CAS.  PRESENTMENT    FOR    PAYMENT.  ^         [CH.  X. 

by  St.  1870,  c.  323,  under  the  name  of  the  Northampton  Loan  & 
Trust  Company,  and  by  St.  1875,  c.  16,  was  allowed  to  change 
its  name  to  that  of  the  Massachusetts  Loan  &  Trust  Company, 
and  to  have  its  location  in  Boston.  See  St.  1881,  c.  95  ;  St.  1888, 
c.  413.  We  assume  that  it  has  the  power  to  discount  commercial 
paper,  and  perform  many  other  acts  which  banks  of  issue  and 
deposit  usually  perform.  But  our  statutes  make  a  distinction  be- 
tween trust  companies  organized  under  our  laws,  and  banks,  and 
we  are  not  aware  that  such  trust  companies  are  commonly  called 
"  banks,"  or  that  there  is  any  well  established  custom  to  present 
promissory  notes  and  bills  of  exchange  payable  at  a  bank  to  such 
trust  companies  for  payment.  The  jn'esent  case  discloses  no  evi- 
dence of  any  such  custom.  We  are  of  opinion  that  the  ruling 
was  right.     Exceptions  overruled. 


Presentment  for  Payment  at  Maker's  Place  of  Busi- 
ness —  What  is  a  Reasonable  Hour  —  Note  Payable  at 
Bank  whick  has  Gone  Out  of  Business. 

Waring  v.  Betts,  90  Va.  96  (17  S.  E.  739). 

Lacy,  J.  This  is  a  writ  of  error  to  a  judgment  of  the  corpo- 
ration court  of  Danville,  rendered  on  the  6th  day  of  October, 
1892.  The  action  was  debt  on  a  negotiable  note  for  $500 
against  J.  L.  Waring,  W.  L.  Waring,  Jr  ,  and  J.  D.  Blair,  maker 
and  indorsers  of  the  said  note,  by  E.  Betts,  the  owner  of  the 
same.  The  note  was  negotiable,  and  pnyable  at  the  Business 
Men's  Bank  of  Richmond,  Va. ,  a  going  concern  at  the  date  of 
the  execution  of  the  note,  but  it  went  out  of  existence,  ceased  to 
do  business,  and  distributed  its  assets  before  the  maturity  of  the 
note.  At  tlie  time  of  the  maturity  of  the  note  it  was  not  paid, 
and  the  action  was  instituted  against  maker  and  indorsers  of  the 
same  as  stated.  The  defense  was  by  demurrer,  and  by  plea  of 
nil  debit,  and  the  defense  is  by  the  indorsers  that  the  note  was 
not  presented  for  payment,  nor  duly  protested,  and  that  they  are 
not  bound.  The  case  was  tried  by  a  jury,  and  a  special  verdict 
rendered,  which  is  as  follows :  — 

"  We,  tlie  jury  sworn  to  speak  the  truth  upon  the  issue  joined, 
upon  our  oath  say  that  the  defendant  J.  L.  Waring  executed  a 
note  in  writing  in  wonis  and  figures,  to  wit:  'Danville,  Va., 
April  26th,  1892,  $500.00.  Four  months  after  date  I  promise  to 
pay  to  the  order  of  myself,  with  interest  until  paid,  five  hundred 
dollars,  for  value  received.  Negotiable  and  payable,  without 
offset,  at  the  Business  Men's  Bank  of  Richmond,  Va.  ;  and  we, 
the  makers  and  indorsers  of  this  note,  hereby  severally  waive  the 
benefit  of  our  homestead  exemption  as  to  this  debt.  J.  L.  Waring. 
No.  due  26-29  Aug.'  Indorsers  on  note:  J.  L.  Waring,  Jr.,  J.  D. 
Blair.  And  other  defendants  indorse  I  said  note.  Tnat  said  note 
was  held  by  W.  S.  Patton,  Sons  &  Company,  bankers,  in  Danville, 
on  the  29th  of  August,  1892,  in   their   possession,  in   Danville. 

332 


CH.  X.]  PRESENTMENT   FOR    PAYMENT.  ILL.  CAS. 

That  said  W.  S.  Patton,  Sons  &  Company  sent  the  following 
telegram:  'Telegram  of  W.  S.  Patton,  Sons  &  Company  to 
Notary.  Dated,  Danville,  Va.,  29th,  1892.  To  J.  F.  Glenn, 
Cash.  Merchants'  National  Bank,  Richmond,  Va. :  We  have 
failed  to  forward  for  collection  note  of  J.  L.  Waring  to  his  order, 
indorsed  by  him,  W.  L.  Waring,  Jr.,  and  J.  D.  Blair,  dated  26th 
of  April,  1892,  payable  four  months,  at  Business  Men's  Bank, 
Richmond,  Va. ,  for  five  hundred  dollars.  Will  send  it  to  you 
by  messenger  to-day.  In  mean  time  demand  payment  of  it  in 
bank  hours,  and,  if  not  paid,  have  it  protested  to-day.  Protect 
us.  W.  S.  Patton,  Sons  &  Company,' — which  was  received  by 
John  F.  Glenn,  cashier  of  Merchant's  National  Bank,  Richmond, 
Va.  (one  of  the  witnesses),  of  Richmond,  between  one  and  two 
p.  m.  on  29th  August,  1892.  That  said  John  F.  Glenn,  as  a 
notary  public  for  the  city  of  Richmond,  made  a  demand  on  W.  L. 
Waring,  Jr.,  one  of  the  defendants,  showing  him  said  writing 
describing  said  note,  at  room  5,  Hanewinckle  Building,  at  2  :  30 
p.  m.,  on  the  29th  of  August,  1892,  for  the  payment  of  said  note, 
and  he  declined  to  pay  it,  and  said  W.  L.  Waring,  Jr. ,  said  that 
he  was  not  authorized  to  represent  said  Business  Men's  Bank. 
That  the  funds  of  the  bank  had  all  been  distril)uted.  That  there 
were  no  assets  of  the  bank  in  his  hands.  That  the  only  place 
of  business  the  said  Business  Men's  Bank  had  on  the  29th  August, 
1892,  was  at  No.  5,  Hanewinckle  Building,  Richmond,  Va. 
That  W.  L.  Waring,  Jr.,  was  the  i)riucipal  manager  of  said  Busi- 
ness Men's  Bank  affairs  on  the  29th  August,  1892.  That  pre- 
vious to  the  29th  August,  1892,  the  Business  Men's  Protective 
Union,  under  whose  charter  the  Business  Men's  Bank  was  doing 
business,  had  determined  to  cease  to  do  banking  business,  and 
had  distributed  its  assets.  That  at  a  subsequent  hour  on  the 
29th  August,  1892,  at  2:30  P.  M.,  said  John  F.  Glenn  went  to 
the  said  office  of  W.  L.  Waring,  Jr.,  No.  6,  Hanewinckle  Build- 
ing, with  the  said  note  in  his  possession,  which  had  been  brought 
to  him  by  W.  F.  Patton,  one  of  the  firm  of  W.  S.  Patton,  Sons  & 
Company,  after  5  P.  M.  on  August 29,  1892,  to  demand  payment 
of  said  note,  and,  not  finding  said  W.  L.  Waring,  Jr.,  in  at  that 
time,  went  immediately  to  the  home  of  said  W.  L.  Waring,  Jr., 
to  demand  payment,  but  did  not  find  him  at  his  residence; 
whereupon  said  John  F.  Glenn,  as  notary  public,  protested  said 
note,  antl  gave  legal  notice  of  said  protest,  as  set  out  in  the  fol- 
lowing protest:  'Virginia,  City  of  Richmond,  to  wit:  Know  all 
men  by  these  presents  that  I,  John  F.  Glenn,  a  notarj'  public  in 
and  for  the  city  aforesaid,  duly  connnissioned  and  qualified,  at 
the  request  of  the  cashier  of  the  INIerchants'  National  Bank  of 
Richmond,  on  the  29th  of  August,  in  the  year  of  our  Lord  1892, 
presented  the  note,  a  copy  of  which  is  the  reverse  of  this,  written  at 
theplaceof  business,  and  also  at  the  residence  of  W.  L.  Waring,  Jr. , 
former  vice-president  of  the  Business  Men's  Bank,  at  which  bank 
said  note  is  payable,  the  said  Business  Men's  Bank  being  no 
longer  in  existence,  and  not  having  an  otfice  or  other  place  of 

333 


ILL.  CAS.  PRESENTMENT    FOR    PAYMENT.  [CH.  X. 

business,  and  demanded  payment  of  the  same,  the  period  limited 
having  expired,  I  also  make  diligent  search  and  inquiry  in  order 
to  demand  payment  of  the  maimer,  but  was  not  able  to  find  him ; 
tbat  the  said  maker  of  said  note,  he  being  a  non-resident,  had  no 
office  or  place  of  business  in  the  city  aforesaid;  wherefore  I,  the 
said  notary,  do  hereby  protest  the  said  note,  as  well  against  the 
indorsers  as  against  the  maker  aforesaid,  and  all  others  whom  it 
did  and  may  concern,  for  all  loss,  damages,  principal,  interest, 
costs,  and  charges  sustained  or  to  be  sustained,  by  reason  of  the 
non-payment  aforesaid,  and  I  thereupon,  on  the  same  day, 
addressed  written  notices  to  the  indorsers  of  the  said  note,  inform- 
ing them  of  the  demand,  non-payment  and  protest  and  dishonor 
thereof,  and  that  the  holders  look  to  them  for  its  payment,  and 
directed  one  to  each  indorser  at  his  post  office  address  as  follows : 
W.  L.  Waring,  Jr.,  City  of  Richmond;  J.  D.  Blair,  Danville, 
Va.  ;  paid  postage,  and  deposited  them  in  the  post  office  in  this 
city,  to  be  forwarded  by  first  mail.  In  testimony  of  all  which  1 
have  hereunto  subscribed  my  name  and  affixed  my  notarial  seal  at 
the  city  of  Richmond,  aforesaid,  the  day  and  year  aforesaid.  J.  F. 
Glenn^  Notary  PiibUc,  Richmond,  Va.  Notarial  charges,  $3.00.' 
That  no  part  of  said  note  and  costs  of  protest  has  been  paid. 
Tbat  at  the  time  said  John  F.  Glenn  demanded  payment  of  said 
note  at  2:30  P.  M.,  August  29th,  1892,  W.  L.  Waring,  Jr.,  did 
not  demand  the  production  of  the  note  sued  on  in  this  suit. 
That  J.  L.  Waring  and  J.  D.  Blair  resided  in  Danville  on  the 
29ih  August,  1892,  and  neither  had  a  place  of  business  in  Rich- 
mond, Va.  But  whether  or  not,  upon  the  whole  matter  aforesaid, 
the  issue  joined  be  for  the  plaintiff  or  for  the  defendant,  we,  the 
jury,  do  not  know,  and  therefore  we  pray  the  advice  of  the  court; 
and  if,  upon  the  whole  matter,  it  shall  seem  to  the  court  that 
issue  is  for  the  plaintiff  upon  said  issue,  in  that  case  we  assess 
the  damages  of  the  plaintiff  $503,  with  interest  thereon  from  the 
29lh  of  August,  1892.  But  if  upon  the  whole  matter  aforesaid  it 
shall  seem  to  the  court  that  the  issue  is  for  the  defendant,  then 
we,  the  jury,  find  for  the  defendants  W.  L.  Waring  and  J.  D. 
Blair  upon  the  said  issue.  That  the  business  hours  of  the  banks 
in  Richmond  were  from  9  A.  M.  to  3  P.  M.,  though  it  is  the  cus- 
tom in  Richmond  to  demand  payment  after  three  P.  M.  H.  A. 
Cobb,  Foreman." — Whereupon,  it  appearing  to  the  court  that 
the  law  was  for  the  plaintiff,  judgment  was  rendered  for  tlie 
plaintiff  against  the  defendants,  in  the  sum  of  $503,  with  interest 
from  the  29th  day  of  August,  1892,  as  by  the  jury  in  their  verdict 
ascertained ;  whereupon  the  plaintiff  applied  for  and  obtained  a 
wr.t  of  error  to  this  court. 

The  first  question  arising  here  is  that  raised  by  the  demurrer. 
The  declaration  states  a  good  case,  and  sets  forth  that  on  its  due 
day  it  was  duly  presented  for  payment  of  the  sum  of  money 
therein  specified,  required  payment  refused,  and  that  it  was  duly 
protested,  etc-  And  the  defendant's  demurrer  to  the  plaintiff's 
declaration  was  properly  overruled.     The  claim  of  the  defendant 

334 


CH.  X.]  PRESENTMENT    FOli    PAYMENT.  ILL.   CAS, 

is  that  there  was  no  presentment  of  the  note,  because  when  pay- 
ment was  demanded  of  the  indorser  W.  L.  Waring,  manager  of 
the  late  Business  Men's  Bank,  Mr.  Glenn  did  not  have  the  note 
in  his  possession,  and  could  not  have  presented  it;  but,  as  has 
been  seen  from  the  facts  found  by  the  jury,  paj'ment  was  refused 
by  Waring,  and  the  note  not  asked  for,  but  pa3'ment  refused,  and 
the  statement  made  that  he  was  not  authorized  to  represent  the 
bank,  which  had  ceased  to  do  business,  and  had  distributed  its 
assets.  Presentment  of  the  1)ill  or  note  and  demand  of  pa3-ment 
should  be  made  by  an  actual  exhibition  of  the  instrument  itself, 
or  at  least  the  demand  of  payment  should  be  accompanied  by 
some  clear  indication  that  the  instrument  is  at  hand,  ready  to  be 
delivered,  and  such  must  really  be  the  case.  This  is  requisite  in 
order  that  the  drawer  or  acceptor  may  be  able  to  judge  (1)  of 
the  genuineness  of  the  instrument ;  (2)  the  right  of  the  holder  to 
receive  payment;  and  (3)  tliat  he  may  immediately  reclaim 
possession  upon  paying  the  amount.  If  on  demand  of  payment 
the  exhibition  of  the  instrument  is  not  asked  for,  and  the  party 
of  whom  demand  is  made  declines  on  other  grounds,  a  formal 
presentment  by  actual  exhibition  of  the  paper  is  consid- 
ered as  waived.  Daniell  Neg.  Inst.,  p.  485,  §  6o4,  citing  Lock- 
wood  V.  Crawford,  18  Conn.  361,  and  Bank  v.  Willard,  5  Mete. 
(Mass.)  216.  All  the  parties  subsequent  to  the  principal  payor 
are  bound  only  as  his  guarantors,  and  promise  to  pay  only  on 
condition  that  a  proper  demand  of  payment  be  made  and  due 
notice  be  given  to  them  in  case  the  note  or  bill  is  dishonored, 
and  we  repeat  this  is  one  of  the  fundamental  principles  of  the  law 
of  negotiable  paper ;  and  the  infrequency  and  the  character  of 
the  circumstances  wliich  will  excuse  the  holder  from  making  the 
demand,  and  still  preserve  to  him  all  his  rights  as  effectually  as 
if  it  were  made,  will  illustrate  the  stringency  of  the  rule  itself. 
1  Pars.  Bills  &  N. ,  p.  442.  The  question  of  excuse,  then,  will 
depend  upon  whether  due  diligence  lias  been  used,  and  presents 
the  ordinary  inquiry  as  to  negligence.  The  principal  excuses 
resolve  themselves  into  two  classes:  First,  the  impossibility  of 
demand  ;  second,  the  acts,  words,  or  position  of  a  i)arty,  proving 
that  he  had  no  right  or  waived  all  right  to  the  demand,  of  the 
waiver  of  which  he  would  avail  himself.  That  impossibility 
should  excuse  non-demand  is  obvious,  for  the  law  compels  no 
one  to  do  what  he  cannot  perform.  But  it  must  be  actual,  and 
not  merelv  hypothetical ;  and,  though  it  need  not  be  absolute,  no 
slight  difficulty  will  have  this  effect.  Id.  The  circumstances 
which  will  excuse  a  demand  are  such  generally  as  apply  to  a 
failure  to  present  and  demand  payment  within  the  required  time, 
not  absolutely.     Id.  444,  445. 

In  this  case  the  presentment  of  the  note  was  not  made  at  bank 
within  the  usual  bank  hours,  with  the  note  in  possession,  but,  as 
we  have  seen,  this  was  excused  in  this  case  (1)  b}'  the  fact  that 
there  was  no  bank  to  present  it  at,  and  (2)  because  payment  was 
refused  upon  the  ground  that  the  bank  had  ceased  to  do  business, 

335 


ILL.  CAS.  PRESENTMENT    FOR   PAYMENT.  [CH.  X. 

and  its  assets  were  distributed ;  and  the  note  was  not  asked  for 
nor  required.  Payment  being  refused  on  other  grounds,  the 
right  to  have  produced  must  be  considered  as  waived.  The  note, 
however,  was  carried  during  the  day  to  the  place  of  business  of 
the  late  manager  of  the  bank,  and  the  indorser  sought  to  be 
charged,  and,  this  being  closed,  it  was  carried  to  his  residence, 
and,  that  being  also  closed,  it  could  not  be  presented  to  him; 
and,  although  it  was  not  in  banking  hours,  it  was  during  the  day- 
time, and  before  the  hour  of  rest.  When  the  note  is  payable  at 
a  bank  it  is  to  be  presented  during  banking  hours,  and  the  paj^er 
is  allowed  until  the  expiration  of  banking  hours  for  payment; 
but  when  not  to  be  made  at  bank,  but  to  an  individual,  present- 
ment may  be  made  at  any  reasonable  time  during  the  day  during 
what  are  termed  "  business  hours,"  which  it  is  held  range 
through  the  whole  day  to  the  hours  of  rest  in  the  evening. 
Pars.  Bills  &  N.  447,  citing  Bank  v.  Hunt,  2  Hill  (N.  Y.), 
635 ;  Nelson  v.  Folterall,  7  Leigh,  194.  And  in  the*  case 
of  Farnsworth  v.  Allen,  4  Gray,  453,  a  presentation  made  at 
9  P.  IM.  at  the  maker's  residence  10  miles  from  Boston, 
when  he  and  his  family  had  retired,  was  held  sufficient. 
And  in  Barclay  v.  Bailey,  2  Camp.  527,  Lord  EUenborough 
sustained  a  presentment  made  as  late  as  8  P.  M.  at  the  house  of 
a  trader.  It  is  only  when  presentment  is  at  the  residence  that 
the  time  is  extended  into  the  hours  of  rest.  If  it  is  at  the  place 
of  business  it  must  be  during  such  hours  when  such  places  are 
customarily  open,  or  at  least  while  some  one  is  there,  competent 
to  give  an  answer.  Pars.  Bills  &  N.  448.  In  this  case  there 
wa3  no  presentment  to  the  maker,  who  could  not  be  found,  which, 
however,  was  unnecessary,  under  section  2842  of  the  Code  of 
Virginia.  The  protest  was  in  due  form,  and  duly  protested, 
which  was  authorized  by  section  2849  of  the  Code,  although  the 
said  note  was  payable  at  a  bank  in  tiiis  State,  and  under  section 
2850  is  prima  facie  proof  of  the  facts  stated  therein,  and  is  sub- 
stantially in  accordance  with  the  finding  of  the  jury.  It  there- 
fore appears  that  such  presentment  as  was  requisite  was  made  to 
the  indorser  and  last  manager  of  the  bank,  and  that  it  was 
impossible  to  present  the  same  at  the  bank  named  therein,  as  it 
has  ceased  to  exist.  We  must  therefore  conclude  that  there  has 
been  sufficient  diligence  on  the  part  of  the  plaintiff,  and  that  the 
judgment  of  the  court  below  in  his  favor  was  right,  and  should 
be  affirmed. 

336 


CHAPTER     XI. 

PROTEST. 

Section  123.  The  object  and  necessity  of  protest. 

124.  By  whom  protest  should  be  made. 

125.  Place  of  protest. 

126.  By   whom    should   presentment  be  made  in  preparation 

for  protest. 

127.  Noting  dishonor  and  extending  protest. 

128.  Contents  of  certificate  of  protest  —  Proper  time  for  the 

same. 

129.  Protest, evidence  of  what—  When  evidence  of  notice. 

§  123.  The  object  and  necessity  of  protest. —  The  pro- 
test is  intended  to  furnish  to  the  holder  legal  testimony  of 
the  fact  thiit  the  required  presentment  and  demand  of  pay- 
ment has  been  made,  and  notice  of  dishonor  given,  to  be 
used  in  an  action  on  the  bill  or  note  against  the  drawer 
and  indorser.  In  the  absence  of  a  notarial  certificate  of 
protest,  these  facts  of  dishonor  and  notice  would  have  to  be 
proved  in  open  court  by  the  personal  testimony  of  the  per- 
sons who  had  made  the  presentment  and  demand,  and  who 
had  given  the  notice  of  dishonor  to  the  drawer  or  indorser, 
who  was  being  sued  on  the  bill  or  note.  Although  it  would 
be  inconvenient  to  do  this  in  any  case  of  an  inland  bill  or 
note,  and  expensive  whore  the  parties  do  not  reside  in  the 
same  place  ;  still,  it  would  be  possible  to  secure  the  desired 
evidence,  when  needed,  since  all  the  parties  in  the  case  of 
inland  bills  and  notes,  are  within  the  jurisdiction  of  the 
courts,  in  which  the  action  would  be  brought  against  the 
drawer  or  indorsers.  But  where  the  bill  or  note  is  for- 
eign,—  because  one  or  more  of  the  parties  reside  beyond 
the  jurisdiction  of  the  courts  of  the  State  or  country  in 
which  the  facts  of  dishonor  of  the  bill  or  note  occurred  — 
the  party  who  could  testify  to  these  facts  could  not  be  com- 
pelled by  judicial  process  to  appear  and  give  his  testimony 
in  the  pending  suit  against  the  foreign  drawer  or  indorser. 

22  337 


§   123  PROTEST.  [CH.  XI. 

For  these  reasons,  it  has  become  the  universal  rule  of  the 
lavv  merchant  of  the  civilized  world,  that  to  secure  and  per- 
petuate this  testimony  the  holder  must  have  the  foreign  bill 
of  exchange  and  promissory  note  protested  for  non-pay- 
ment. And  so  necessary  is  protest  now  considered  in  the 
case  of  a  foreign  bill  of  exchange,  that  the  drawer  and 
indorsers  of  such  a  bill  cannot  be  held  liable,  unless  proof 
of  dishonor  is  made  by  the  protest  for  non-acceptance  or 
non-payment.  No  other  evidence  will  be  receivable  in  the 
place  of  the  protest.  It  has  become  an  organic  part  of  the 
foreign  bill.^ 

As  long  as  a  promissory  note  has  not  been  indorsed,  pro- 
test can  in  no  case  be  required,  since  the  maker  is  liable 
in  the  absence  of  proof  of  dishonor  of  the  note.  But,  as 
soon  as  it  has  been  indorsed,  and  it  is  a  foreign  note,  the 
protest  is  as  necessary,  in  order  to  fasten  liability  on  the 
indorser,  as  in  the  case  of  a  foreign  bill.^ 

In  the  case  of  inland  bills  and  notes,  the  protest  is  not 
necessary,  because  the  facts  of  dishonor  can  be  shown  by 
the  direct  testimony  of  the  party  who  made  the  present- 
ment and  demand,  and  met  with  a  refusal  of  payment,  as 
has  already  been  explained;  and,  independently  of  statute 
authorizing  the  protest  of  inland  bills  and  notes,  the  pro- 
test of  such  paper  means  nothing  and  has  no  value  what- 
ever.^    And  so,  also,  in  the  absence  of  statute,  the  protest 

1  Union  Bank  v.  Hyde,  6  Wheat.  572;  Burke  v.  McKay,  2  How.  66; 
Commercial  Bank  v.  Varnum,  49  N.  Y.  269;  Ocean  Nat.  Bank.  v.  Will- 
iams, 102  Mass.  141;  Green  v.  Louthain,  49  Ind.  139;  McMurchey  v. 
Robinson,  10  Ohio,  496;  State  v.  McCormick,  57  Kan.  440  (46  P.  777); 
Carter  v.  Union  Bank,  7  Humph.  548  (46  Am.  Dec.  89) ;  Ashe  v.  Beasley 
(N.  D.  '96),  69  N.  W.  188;  Commercial  Bank  v.  Barksdale,  36  Mo.  563. 
But  see  Green  v.  Elson,  31  Tex.  159. 

2  Williams  v.  Putnam,  14  N.  H.  540  (40  Am.  Dec.  204) ;  Piner  v.  Clary, 
17  B.  Mon.  645;  Bay  v.  Mitchell,  15  Conn.  15.  But  see  Kirtland  v.  Wan- 
zer,  3  Duer,  278;  Bonar  v.  Mitchell,  5  Exch.  415. 

8  Young  V.  Bryan,  6  Wheat.  146;  Union  Bank  v.  Hyde,  6  Wheat.  572; 
Pollard  V.  Bowen,  67  Ind.  232;  Smith  v.  Curlee,  59  HI.  221;  Bond  v. 
Bragg,  17  III.  69;  Wood  River  Bk.  v.  First  N.  Bk.,  36  Neb.  744  (55  N.  W. 
239);  Jones  v.  Heiliger,  36  Wis.  149;  Douglass  v.  Bank  of  Commerce,  97 
Tenn.  133;  36  S.  W.  874. 

338 


CII.  XI  ]  PROTEST.  §    124 

of  a  foreign  bill  is  no  evidence  of  dishonor  in  the 
country  in  which  the  protest  was  made.^  But  in  most 
of  the  United  States  and  in  England  (and  probably,  else- 
where in  the  civilized  world)  statutes  have  been  enacted, 
which  permit  the  use  of  the  notarial  protest  in  the  proof 
of  the  dishonor  of  domestic  or  inland  bills  and  notes.  In 
some  of  the  States,  it  is  al)solutely  required  by  statute  ;  and 
probably  in  all,  the  protest  is  required  to  be  made,  in  order 
to  recover  the  special  damages  which  are  authorized  by  the 
statute  to  be  recovered  for  the  dishonor  of  the  paper. 
But,  sometimes,  the  statutes  are  permissive  only,  and  do 
not  absolutely  require  protest,  in  order  to  save  the  liability 
of  drawer  and  indorsers.^ 

Protest  is  required  to  be  made,  not  only  of  non-payment 
of  bills  and  notes,  but,  likewise,  of  the  non-acceptance  of 
a  bill  ;  and,  this  too,  when  presentment  for  acceptance  is 
not  required  to  be  made  before  the  day  of  maturity.  If 
the  presentment  for  acceptance  is  actually  made  before  the 
day  of  maturity,  there  should  be  a  prompt  protest  for  non- 
acceptance,  as  in  the  case  of  refusal  of  payment.^ 

§  124.  By  wbom  protest  should  be  made. —  The  gen- 
eral law-merchant  requires  the  protest  for  dishonor,  whether 
of  non-acceptance  or  non-payment,  to  be  made  by  a  notary 
public,  and  by  the  same  notary  who  presented  the  paper 
for  honor,  and  noted  its  dishonor.*  But  if  no  notary  can 
be  found  in  the  place  of  payment  —  a  very  unusual  occur- 

1  Nicholls  V.  Webb,  8  Wheat.  326;  Chessmer  v.  Nojes,  4  Camp.  129; 
Corbin  v.  Planters'  N.  B.,  87  Va.  GGl  (13  S.  E.  98). 

2  Bailey  v.  Dozier,  6  How.  23;  Wanzer  v.  Tupper,  8  How.  234;  Town- 
send  V.  Auld,  28  N.  Y.  S.  74G;  8  Misc.  Rep.  616;  Hays  v.  Citizens'  Sav. 
Bk.  (Ky.  '97),  40  S.  W.  573;  Presby  v.  Thomas,  1  App.  D.  C.  171;  Brown 
V.  Wilson,  45  S.  C.  519;  23  S.  E.  630;  Ashe  v.  Beasley  (N.  D),  69  N.  W.  188. 

•"  Bank  of  Washington  I'.Triplett,!  Pet.  25;  Watson  u.  Tarpley,  18  How. 
517;  Watson  t'.  Loring,  3  Mass.  557;  Allen  r.  Merchants'  Bk.,  22  Wend.  216 
(34  Am.  Dec.  289) ;  Phillips  v.  McCurdy,  1  Harr.  &  J.  187. 

*  Cril)bs  V.  Adams,  13  Gray,  507;  Ocean  Nat.  Bank  v.  Williams,  102 
Mas><.  141;  Commercial  Bk.  v.  Variium,  49  N.  Y.  269;  Gessuer  v.  Smith, 
18  N.  Y.  St.  Rep.  1013;  2  N.  Y.  S.  655;  Commercial  Bk.  v.  Barksdale,  36 
Mo.  563;  Carter  v.  Union  Bank,  7  Humph.  548  (46  Am.  Dec.  89). 

339 


§    126  PROTEST.  [CH.  XI. 

ence  at  the  present  day, —  then  the  protest  may  be  made 
out  by  any  reputable  citizen  of  the  place,  customarily 
attested  by  two  witnesses.^ 

§  125.  Place  of  protest. —  In  the  case  of  protest  for 
non-payment  of  a  bill  or  note,  it  is  patent  that  protest  can 
l)e  made  only  in  the  place  of  payment.  But  where  a  bill  is 
made  payable  in  some  other  place  than  the  domicile  or 
place  of  business  of  the  drawee;  since  the  bill  must  at  all 
events  be  presented  for  non-acceptance  in  the  domicile  or 
place  of  business  of  the  drawee;  it  is  held  that,  not  only 
must  protest  for  non-acceptance  be  made  there,  but  that 
the  protest  for  non-payment  may  be  made  there  also,  as 
long  as  there  has  not  been  a  prior  acceptance  of  the  bill  by 
the  drawee. 2 

§  12fi.  By  whom  should  presentment  be  made  in  pre- 
paration for  protest. —  As  it  has  been  explained  in  the 
preceding  chapters,  for  the  purpose  of  receiving  payment, 
and  for  every  other  purpose  than  that  of  protest,  the 
proper  party  to  make  presentment  for  acceptance  or  pay- 
ment is  the  holder  or  his  duly  authorized  agent.  If,  how- 
ever, acceptance  or  payment  is  refused,  and  protest  for 
non-acceptance  or  non-payment  is  required,  the  notary 
public  who  is  to  make  the  protest  is  obliged  by  law  to 
make  a  second  presentment  and  demand  for  acceptance  or 
non-acceptance,  so  that  he  can  of  his  own  knowledge  certify 
to  the  fact  of  dishonor.  For  the  same  reason,  it  is  generally 
held  to  be  necessary  for  the  notary,  who  issues  the  certifi- 
cate of  protest,  to  make  the  presentment  himself,  and  not 
by  procuration  of  his  clerk.'     Nevertheless,  the  commercial 

1  Burke  v.  McKay,  2  How.  66;  Todd  v.  Neal's  Admr.,  49  Ala.  266; 
Read  v.  Bk  of  Ky.,  1  T.  B.  Mon.  91  (15  Am.  Dec.  86). 

2  Mitchell  V.  Baring,  4  C.  &  B.  35;  s.  c.  10  B.  &  C.  4.  See  Grigsby 
V.  Ford,  3  How.  (Miss.)  184;  Neely  v.  Morris,  2  Head  595  (75  Am. 
Dec.  753). 

*  Ocean  N.  B.  v  Williams,  102  Mass.  141;  Commercial  Bank  v.  Var- 
num,49  N.  Y.  2C9;  Gessner  u.  Smith,  18  N.  Y.  St.  Rep.  1013;  2  N.  Y.  S. 
G55;  McClaneu.  Fitch,  4  B.  Mon.  GOO;  Donegan  v.  Wood,  49  Ala.  242  (20 
340 


CH.  XI.]  PROTEST.  §   127 

law  recognizes  the  validity  of  a  notarial  protest,  which 
is  based  upon  a  presentment  by  the  notary's  cleric,  wher- 
ever there  is  a  clearly  established  custom  for  the  clerk  to 
make  the  presentment  in  such  cases. ^ 

§  127.  Noting  the  dishonor  and  extending  protest  — 
Proper  time  for  same. — The  law  merchant  requires  that 
the  essential  part  of  the  protest  should  be  made  on  the 
same  day  that  the  presentment  was  made ;  so  that  the 
errors,  due  to  defective  memory,  may  be  reduced  to  a 
minimum  .^  In  order,  however,  to  facilitate  the  business  of  a 
busy  notary,  particularly  in  the  case  of  the  notary  of  a  large 
bank,  a  distinction  is  made  by  the  law  between  the  writing 
in  full  of  the  certificate  of  protest,  which  must  be  put  in 
evidence  in  an  action  on  the  bill  or  note  against  a  drawer 
or  indorser ;  and  a  memorandum  of  the  essential  facts  of 
dishonor  made  by  the  notary  in  his  note  book.  The  memo- 
randum is  called,  noting  the  dishonor;  and  if  it  is  made  on 
the  day  of  maturity  and  presentment  on  the  back  of  the 
paper,  or  in  the  notary's  note  book,  and  contains  a  com- 
plete statement  of  the  material  facts  of  dishonor;  this 
memorandum  is  held  to  be  a  suflScient  compliance  with  the 
requirements  of  the  law,  that  the  protest  should  be  made 
out  on  the  day  of  presentment.  And  the  notary  mav,  at 
his  leisure,  at  any  time  thereafter  before  the  trial  of  the 
action  in  which  it  is  required,  make  out  his  certificate  of 
protest.^ 

Am.  Rep.  275);  Commercial  Bk.  v.  Bardsdale,  36  Mo.  563;  Clough  w. 
Holden,  115  Mo.  336  (21  S.  W.  1071). 

*  Cribbs  v.  Adams,  13  Gray,  597;  Ocean  Nat.  Bank  v.  Williarass,  102 
Mass.  HI;  Commercial  Bk.  v.  Varnum,  49  N.  Y.  2(;9;  Gawtry  v.  Doane, 
51  N.  Y.  90;  Buckley  v.  Seymour,  30  La.  Ann.  1384;  Bk.  of  Ky.  r.  Garey, 
6  B.  Mon.  628;  Stewart  v.  Allison,  6  Serg.  &  R.  324  (9  Am.  Dec.  43:5) 

2  Deunistoun  v.  Stewart,  17  How.  606;  Read  v.  Bk.of  Kentucky;  1  T. 
B.  Mon.  91(15  Am.  Dec.  86) ;  Leftley  v.  Mills,  4  T.  R.  174 ;  Commercial 
Bank  v.  Barksdale,  36  Mo.  563. 

3  Dennistounr.  Stewart,  17  IIow.  606;  Bailey  v.  Dozler,  6  How.  23; 
Cayuga  Co.  Bk.  v.  Hunt,  2  Hill,  635;  Commercial  Bk.  v.  Barksdale,  36 
Mo.  663 ;  Grimball  v.  Marshall,  6  Sm.  &  M.  359;  Orr  v.  Maginnis,  7  East, 
358. 

341 


§    128  PROTEST.  [CH,  XI. 

§  128.   The  contents  of  the  certificate    of    protest. — 

It  is  desired  here,  to  set  forth  what  are  the  essential  con- 
tents of  the  certificate. 

1.  The  certificate  should  state  accurately  the  date  of  pre- 
sentment; and,  although  probably  not  necessary,  the  hour 
of  the  presentment  should  be  given. ^ 

2.  If  the  bill  or  note  is  payable  at  a  particular  phice,  the 
certificate  should  set  forth  the  fact,  that  presentment  was 
made  at  that  place. ^ 

3.  It  seems  to  be  required,  although  the  reason  for  it  is 
not  very  plain,  that  the  certificate  should  contain  distinct 
and  separate  si'dtemeuis  of  present  meut  for,  and  demand  of , 
payment.^ 

4.  The  refusal  of  acceptance  or  of  payment  must  be 
distinctly  stated.* 

5.  The  names  of  the  persons,  by  whom  and  to  whom 
the  presentment  was  made.  This  is  however  not  strictly 
neces-ary,  as  it  may  be  presumed  from  the  statements  of 
presentment  and  demand  that  presentment  has  been  made 
by  and  to  the  proper  person.^ 

6.  Although  not  necessary,  it  is  customary  to  attach  to 
the  certificate  a  verbatim  copy  of  the  bill  or  note,  with  all 
the  indorsements  thereon,  so  that  the  original  on  which 
the  protest  was  made,  may  be  easily  identified. 

7.  The  notary  must   sign  the  certificate.     Although  not 

*  Walmsley  v.  Acton,  44  Barb.  312;  Chatham  Bank  v.  Allison,  15  Iowa, 
357.    See  Jarvis  v.  Garnett,  39  Mo.  268 ;  Skelton  v.  Dustin,  92  111.  49. 

2  People's  Bank  v.  Brooke,  31  Md.  7  (1  Am.  Rep.  11).  See  Seneca  Co. 
Bk.  V.  Neass,  5  Denio,  329. 

3  Musson  V.  Lake,  4  How.  262;  Gawtry  v.  Doane,  51  N.  Y.  90;  War- 
nick  V.  Crane,  4  Denio,  460;  People's  Bank  v.  Brooke,  31  Md.  7  (1  Am. 
Rep.  11);  Watson  V.  Brown,  14  Ohio,  473;  Nave  u.  Richardson,  36  Mo. 
130;  Commercial  Bank  v.  Barksdale,  36  Mo.  563. 

4  Littledale  v.  Maberry,  43  Me.  264;  Arnold  v.  Kinlock,  50  Barb.  44; 
Young  V.  Bennett,  7  Bush,  474.  But  see  Derrickson  v.  Whitney,  6  Gray, 
248;  Wetherall  v.  Clagjjett,  28  Md.  465. 

^  See  Hildeburn  v.  Turner,  6  How.  69;  McAndrew  v.  Radway,  34  N. 
Y.    511;  Dickerson   v.  Turner,  12  lud.  223;   Witkowsky  v.  Maxwell,  69 
Miss.   65  (10  So.   453);  Duckert  v.   Van  Lilienthal,  11  Wis.  56;  Stix  «. 
Matthews,  75  Mo.  86, 
342 


CH.  XI.]  PROTEST.  §    129 

absolutely  necessary,  in  the  absence  of  statutory  require- 
ment, it  is  customary  for  him  to  subscribe  his  name;  ^.  e.,  to 
write  his  name  below  the  certificate.  But  a  clerk  may  affix 
the  signature,  if  done  by  the  notary's  authority  or  direction.* 

8.  The  notary's  seal  must  be  impressed  upon  the  cer- 
tificate. Without  such  seal,  the  certificate  cannot  be  re- 
ceived as  prima  facie  evidence  of  the  facts  stated  in  the 
certificate. 2  Any  sort  of  an  impression  on  the  paper  would 
be  a  sufficient  seal,  if  it  bore  evidence  of  its  being  the 
adopted  seal  of  the  notary,  except,  possibly,  a  mere  scit)ll.^ 

9.  The  certificate  of  protest  generally  contains  now  a 
statement  of  the  fact  that  notices  of  dishonor  have  been 
sent  to  parties  secondarily  liable,  and  the  names  of  such 
parties  and  their  addresses  are  given.  The  effect  of  this 
statement  in  the  certificate  is  explained  in  the  next  section. 

§  129.  Protest,  evidence  of  wliat  —  When  evidence  of 

notice. —  The  notarial  certificate  is,  at  the  common  law, 
evidence  of  the  facts  therein  stated,  only  so  far  as  they 
fall  within  the  duty  of  the  notary  in  making  the  present- 
ment and  demand  of  payment.  If  the  notary  goes  beyond 
this  and  certifies  to  collateral  facts,  having  no  direct  bear- 
ing on  the  sufficiency  of  the  presentment,  the  certificate  is 
not  lawful  evidence  of  those  facts;  and,  if  they  are  to  be 
proven,  they  must  be  established  by  other  testimony.* 

»  Fulton  V.  MacCracken,  18  Mel.  528  (81  Am.  Dec.  620). 

2  Townsley  v.  Surarall,  2  Pet.  170;  Dickens  v.  Beal,  10  Pet.  582;  Bk. 
of  Kochcster  v.  Gray,  2  Hill,  227;  Mullen  v.  Morris,  2  Barr  (2  Pa.  St.) 
85;  Tickuor  v.  Roberts,  11  La  U;  Bradley  v.  Northern  Bk.,  60  Ala.  258; 
Fletcher  v.  Ark.  N.  B.  (Ark.),  35  S.  W.  228;  Carter  v.  Burley,  9  N. 
H.  558;  Rindskopf  v.  Maloney,  9  Iowa,  640  (74  Am.  Dec.  367);  Bryden  v. 
Taylor,  2  liar.  &  J.  396  (3  Am.  Dec.  554).  But  see  contra  in  absence  of 
statute  requiring  seal,  Huffaker  v.  Nat.  Bank  of  Monticello,  12  Bush, 
287;  Bk.of  Kentucky  v.  Pursley,  3  T.  B.  Mou.  238. 

3  Bk.  of  Manchester  v.  Slason,  13  Vt.  334;  Connolly  v.  Goodwin,  5 
Cal.  220. 

*  Townsley  v.  Sumrall,  2  Pet.  170;  State  v.  McCormick,  57  Kan.  440 
(46  P.  777)  ;  Dakin  v.  Graves,  48  N.  II.  45;  Duckert  v.  Von  Lilienthal,  II 
Wis.  57;  Dumont  v.  Pope,  7  Blachf.  367;  Wood  River  Nat.  Bank  v.  First 
Nat.  Bk  ,  36  Neb.  744  (55  N.  W.  2.39);  City  Sav.  Bk.  v.  Kensington  Land 
Co.  (Tenn.  Ch.  '96),  37  S.  W.  1037. 

343 


§   129  PROTEST.  [CH.  XI. 

The  notarial  certificate  is  an  official  act  which  cannot  be 
performed  by  any  one  but  a  notary.  In  the  absence  of 
statute,  enlarging  his  duties  or  his  powers,  his  certificate 
cannot  be  taken  as  prima  facie  evidence  of  anything  else 
than  his  performance  of  his  official  duties.  It  is  now  a 
very  common,  if  not  a  universal,  custom  for  the  notary, 
who  issues  the  certificate  of  protest,  to  send  the  notices  of 
dishonor  to  the  parties  secondarily  liable,  whom  the  holder 
of  the  bill  or  note  wishes  to  hold  liable  thereon ;  and  to 
insert  in  the  notarial  certificate  a  statement  that  notices  of 
dishonor  have  been  sent  to  the  parties  therein  named.  In 
many  States,  this  is  authorized  by  statute.  In  the  absence 
of  statute,  authorizing  and  requiring  it,  this  is  not  a  part 
of  the  duty  of  the  notary.  A  local  custom  may,  inde- 
pendent of  statute,  make  this  a  part  of  the  notary's  duty 
for  the  breach  of  which  he  could  be  held  personally  liable. ^ 
But,  unless  a  statute  authorized  it,  his  statement  in  the 
certificate  of  protest  would  not  be  accepted  in  court  as 
prima  facie  evidence  of  the  fact  that  the  parties  had  been 
duly  notified.  It  would  have  to  be  proven  by  the  personal 
testimony  of  the  notary. ^ 

If  the  protest  has  been  made  by  the  notary,  at  the 
proper  time  and  in  the  proper  place,  but  all  the  statements 
necessary  to  prove  a  proper  demand  and  notice  do  not  ap- 
pear in  the  notarial  certificate,  parol  evidence  is  admissible 
to  supply  the  deficiency.' 


3 


1  Dickens  v.  Beal,  10  Pet.  572;  Legg  v.  Vinal,  165  Mass.  555  (43  N.  E. 
518)  ;  Hobbs  v.  Chemical  Nat.  Bank,  97  Ga.  524  (25  S.  E.  348)  ;  Brennan 
V.  Vogt,  97  Ala.  647  (11  So.  893);  Bank  of  Rochester  v.  Gray,  2  Hill, 
237;  Wood  River  N.  B.  v.  First  N.  B.,  36  Neb.  744  (55  N.  W.  239). 

2  Dickens  v.  Beal,  10  Pet.  572;  Sims  v.  Hundley,  6  How.  1;  Hobbs  v. 
Chemical  Nat.  Bank,  97  Ga.  524  (25  S.  E.  348);  Miller  v.  Hackley,  5 
Johns.  375  (4  Am.  Dec.  372);  Schorr  v.  Woodlief,  23  La.  Ann.  473;  Lloyd 
V.  McGarr,  3  Barr  (3  Pa.  St.)  474;  Brennan  v.  Vogt,  97  Ala.  647  (11  So. 
893);  Couch  v.  Sherrill,  17  Kan.  622;  Duckert  v.  Von  Lilienthal,  11  Wis. 
56;  Bond  v.  Bragg,  17  111.  69;  State  ex  rel.  Workingmen's  Banking  Co.  v. 
Edmunds,  66  Mo.  App.  47. 

3  Magoun  v.  Walker,  49  Me.  419;  Reynolds  v.  Appleman,  41  Md.  615; 
Peabody  Ins.  Co.  v.  Wilson,  29  W.  Va.  528  (2  S.  E.  888)  ;  Seneca  Co.  Bk. 
V.  Neass,  5  Denio,  329;  Sasscer  v.  Farmers'  Bk.,  4  Mo.  409. 

344 


CH.  XI.]  PROTEST.  ILL.  CAS. 

Finally,  the  protest  is  prima  facie  evidence  only,  and 
the  facts  therein  stated  may  be  disproved  by  any  compe- 
tent testimony  to  the  contrary.^ 


ILLUSTRATIVE   CASES. 


Clough  V.  Holden,  115  Mo.  336  (21  S.  W.  1071"). 
Wood  River  Bank  i>.  First  Nat.  Bank,  36  Neb.   744  (55  N.  W.  239). 

Sufficiency   of   Protest  —  Presentment    After    Ordinary 
Business  Hours  by  Notary. 

Clough  V.  Holden,  115  Mo.  336  (21  S.  W.  1071). 

In  banc.  Appeal  from  circuit  court,  Jackson  county ;  R.  H. 
Field,  Judge. 

Action  by  David  M.  Clough  against  John  D.  Bancroft  and 
Howard  M.  Holden  on  a  note.  The  case  was  dismissed  by  plain- 
tiff as  to  Bancroft.  From  a  judgment  for  plaintiff ,  defendant 
Holden  appeals.     Reversed. 

For  decision  in  division  No.  1,  see  20  S.  W.  Rep.  695. 

The  other  facts  fully  appear  in  the  following  statement  by 
Gantt,  J. : — 

This  action  was  originally  commenced  against  John  D.  Bancroft 
as  maker,  and  Howard  M.  Holden  as  indorser,  of  the  following 
note:  "$4,000.  Chicago,  October  6th,  1888.  On  the  first  day 
of  July,  1889,  after  date,  I  promise  to  pay  to  the  order  of  the 
Union  Tie  Company,  Chicago,  four  thousand  dollars,  at  room  70, 
Home  Insurance  Buikiing,  Chicago,  Illinois.  Value  received. 
No.  9,995.  John  D.  Bancroft."  [Indorsed]  "  Union  Tie  Com- 
pany. J.  D.  Bancroft,  Treasurer.  Pay  to  the  order  of  D.  M. 
Clough,  Esqr.  Howard  M.  Holden,  Kansas  City,  Mo.  D.  M. 
Clough.  Pay  D.  Hoyt,  cashier,  or  order,  for  collection,  account 
of  Bank  of  Minneapolis.     M.  Bofferding,  Cashier." 

This  last  indorsement  was  erased  when  the  action  was  begun. 
John  D.  Bancroft,  the  maker,  entered  his  voluntary  appearance 
to  the  cause,  and  filed  his  answer.  Holden,  the  indorser,  was 
duly  served  in  Jackson  county,  and  filed  his  answer.  After  the 
issues  were  made  up,  Bancroft  applied  for  a  change  of  venue, 
pending  which  the  plaintiff  dismissed  as  to  him,  to  which  action 
of  the  court  defendant  Holden  excepted.  The  answer  of  defend- 
ant Holden  contained,  first,  a  general  denial,  and  these  special 
defenses:   "(2)  This  defendant,   for  his  further  answer  to  said 

1  Dickens  v.  Beal,  10  Pet.  572;  Dunn  v.  Parson,  66  Hun,  635;  Johnson 
V.  Brown,  154  Mass.  106  (27  N.  E.  994);  Peabody  Ins.  Co.  v.  Wilson,  29 
W.  Va.  528  (2  S.  E.  888);  Union  Bk.  v.  Fowlkes,  2  Sneed,  654;  Gessner 
V.  Smith,  18  N.  Y.  St.  Rep.  1013;  2  N.  Y.  S.  655. 

345 


ILL.  CAS.  PROTEST.  [CH.   XI. 

petition,  states  that  it  is  true  that  the  said  Bancroft  made  and  the 
said  Holden  indorsed  the  note  described  in  said  petition,  but  de- 
fendant further  states  that  he  was  merely  an  accommodation 
indorser,  and  that  he  had  no  greater  or  further  interest  in  said 
note  than  as  accommodation  indorser  for  the  said  Bancroft.  (3) 
This  defendant  further  states  that  the  said  note  was  obtained 
from  the  said  Bancroft  by  fraud  and  misrepresentation,  and  with- 
out consideration,  and  that  the  plaintiff  at  the  lime  he  took  said 
note  knew  that  the  same  had  been  obtained  from  said  Bancroft  by 
fraud  and  misrepresentation,  and  without  consideration,  and  that 
he  never  paid  value  for  the  same,  and  that  said  Holden  was 
merely  an  accommodation  indorser  on  said  note.  (4)  This 
defendant,  further  answering,  states  that  plaintiff  in  th's  cause 
did  institute  suit  against  him  and  the  said  John  D.  Bancroft,  the 
maker  of  said  note,  and  that  since  the  institution  of  said  smt, 
and  after  answer  filed  by  him  in  this  cause,  he  refuses  further  to 
prosecute  his  action  against  the  said  Bancroft.  Wherefore  this 
defendant,  having  fully  answered,  asks  to  be  hence  discharged, 
with  his  costs  in  this  behalf  created."  To  this  answer,  plaintiff 
filed  the  following  reply :  "  The  plaintiff ,  for  amended  reply  to 
the  answer  of  defendant  in  the  above  entitled  cause,  says  it  is 
true  th:it  the  defendant  Bancroft  made  and  the  said  Holden 
indorsed  the  said  note  described  in  the  petition,  but  denies  each 
and  every  other  allegation  contained  in  said  answer,  and  says  that 
for  value  received  before  the  maturity  thereof  the  said  note  was 
indorsed  and  delivered  to  this  plaintiff,  and  he  is  now  the  owner 
and  holder  thereof  in  good  faith,  without  any  knowledge  then  or 
now  that  there  was  any  fraud  or  defect  or  failure  of  consideration 
in  any  wise  connected  with  said  note,  and  prays  judgment  as  in 
the  petition."  The  trial  resulted  in  a  judgment  for  plaintiff, 
from  which  defendant  Holden  has  appealed  to  this  court.  The 
errors  assigned  will  be  considei*ed  in  the  order  in  which  it  is 
alleged  they  occurred. 

Gantt,  J.  {after  Hating  the  facts).  1.  To  sustain  his  case 
against  defendant  Holden  as  an  indorser,  plaintiff  offered  a  copy 
of  the  note,  with  all  the  indorsements  thereon  as  above  set  forth, 
with  the  following  certificate  of  protest:  "  State  of  Illinois,  Cook 
county  —  ss. :  Be  it  known,  that  on  this  3d  day  of  July,  in  the 
year  of  our  Lord  1889,  I,  Ben.  vS.  Mayer,  notary  public,  duly 
commissioned  and  sworn,  and  residing  in  Chicago,  in  said  county 
and  State,  at  the  request  of  the  Continental  National  Bank,  went 
with  the  original  note,  of  which  a  true  copy  is  above  written,  to 
the  office  of  John  D.  Bancroft,  Room  70,  Home  Ins.  Bldg.,  at 
5:20  P.  M.,  to  demand  payment  thereon,  and  found  the  door 
locked,  whereupon  I,  the  said  notar3%  at  the  request  of  the 
aforesaid,  did  protest,"  etc.  ;  which  certificate  was  duly  signed 
by  the  notary,  and  sworn  to  before  Howard  Rope,  another  notarv. 
To  the  introduction  of  this  certificate  of  protest  defendant  ob- 
jected, for  the  reason  that  it  appeared  the  note  was  payable  at 
an  office,  room  70,  in  an  insurance  building,  and  the  certificate 

346 


CH.  XI.]  PROTEST.  ILL.  CAS. 

does  not  recite  that  this  note  was  presented  during  business 
hours;  that  it  could  not  be  said,  as  a  matter  of  law,  that  5:20 
P.  M.  was  within  business  hours.  The  court  overruled  this  ob- 
jection, to  which  defendant  excepted.  Defendant  afterwards 
called  Thomas  Wright,  and  this  witness  having  testified  that  he 
was  and  had  been  a  resident  of  Chicago  for  a  year  and  a  half,  and 
knew  the  location  of  the  Home  Insurance  Buildino:,  in  said 
city,  he  was  asked  what  were  the  ordinary  business  hours  in 
Chicago,  and  witliin  what  hours  business  men  could  usually  be 
found  in  their  offices.  Tlie  court  refused  to  permit  him  to 
answer  the  question.  After  repeated  efforts  to  show  the  custom 
as  to  business  hours,  all  of  which  were  overruled  by  the  court, 
"  defendant  offered  to  prove  by  this  witness  that  this  presenta- 
tion and  demand  for  pa3'ment  were  not  made  in  the  usual  business 
hours  of  ottice  men  and  business  men  in  the  city  of  Chicago," 
which  was  by  the  court  excluded,  and  defendant  excepted. 

Ihe  admission  of  the  certificate  over  objection,  and  the  rejec- 
tion of  the  evidence  to  show  that  a  demand  for  payment,  made  at 
6:20  P.  M.,  was  not  within  business  hours,  present  the  question 
very  clearl}-,  in  two  aspects.  The  note  sued  on  was  made  pay- 
able at  a  specified  business  place.  If  a  negotiable  promissory 
note  or  bill  of  exchange  is  made  payable  at  a  particular  bank, 
presentment  for  j^ayment  must  be  made  at  said  bank  during 
banking  hours.  Tied.  Com.  Paper,  §  317;  1  Daniel  Neg.  Inst., 
§  600;  Story  Prom.  Notes  (7th  ed.),  §§  22G,  227;  Story  Bdls, 
§§230-249;  Swan  v.  Hodges,  3  Head,  251.  And  it  is  well 
settled  that  if  a  i)romissory  note  is  payable  at  a  particular  busi- 
ness place,  whether  bank  or  not,  it  will  be  sufficient  for  the 
holder,  in  order  to  charge  the  indorser,  to  present  the  same  for 
payment  at  the  specified  place,  within  busmess  hours,  and  he  is 
under  no  obligation,  in  case  of  dishonor  at  that  place,  to  present 
it  for  payment  elsewhere,  or  personally  to  the  maker.  Law- 
rence /y.  Dobyns,  30  Mo.  19G;  1  Daniel  Neg.  In^t.,  §635; 
Story  Prom.  Notes,  §  234 ;  Sulsbacher  v.  Bank,  86  Tenn. 
201;  6  S.  W.  Kep.  120;  Brent's  Exr's  v.  Bank,  1  Pet. 
92;  Cox  V.  Bank,  100  U.  S.  716;  Hawkey  v.  Borwick,  4  Bing. 
136;  Bank  v.  Smith,  11  Wheat.  171.  That  the  note  in  (piestiou 
was  presented  at  the  place  designated  —  the  office  of  Bancroft, 
Room  No.  70,  Home  Insurance  Building,  Chicago  —  on  the  day 
it  matured,  doesnot  admit  of  question.  On  this  point  the  notary's 
certificate  is  exi)licit,  but  the  defendant  insisted  the  certificate  of 
protest  was  in^ullicient  in  not  stating  that  he  presented  the  note 
within  business  hours.  He  states  tliat  he  presented  it  at  5:20 
o'clock,  P.  M.  The  certificate  is  sufiicient  on  its  face  to  raise  the 
presumption  that  he  made  the  demand  within  business  hours. 
Sulzbacher  v.  Bank,  8C^  Tenn.  205  ;  6  S.  W.  Rep.  129  ;  Baura- 
gardner  v.  Reeves,  35  Pa.  St.  250  ;  Wiseman  r.  Chiappella,  23 
How.  368,  379,  380;  Burbank  v.  Beach,  15  Barb.  326;  Bank  v. 
Hunt,  2  Hill,  635.  In  these  cases  in  the  supreme  court  of  the 
United  States  and  New  York  the  certificate  was  general,  and  the 

347 


ILL.  CAS.  PROTEST.  [CH.  XI. 

courts  ruled  the  presumption  was  that  the  notary  had  made  the 
presentment  during  business  hours.  We  take  it  that  5  :20  P.  M. 
is  not  such  an  unusual  hour  that  this  court  would  be  justified  in 
holding,  as  a  matter  of  law,  that  it  was  not  within  business  hours 
in  Chicago.  American  courts  are  wont  to  take  judicial  notice  of 
the  banking  hours  of  any  large  city  lying  within  the  area  of  the 
jurisdiction  of  the  court,  though  there  is  no  authority  for  sup- 
posing that  the  banking  hours  of  the  city  of  New  York  would  be 
considered  as  judicially  known  to  the  courts  of  Boston  or  Chicago, 
or  vice  versa.  "  Unquestionably  proof  would  have  to  be  intro- 
duced." Daniel  Neg.  Inst.,  §  601;  Morse  Banks,  371.  But 
although  the  notary's  certificate  is  prima  facie  evidence  that  the 
note  was  presented  for  payment  in  business  hours,  it  is  only  prima 
facie. 

This  brings  us  to  the  point  of  controversy  in  this  case,  the 
action  of  the  trial  court  in  refusing  to  permit  the  appellant  to 
show  that  5:20  P.  M.  was  not  within  business  hours  in  Chicago. 
It  will  be  observed  that  the  competency  of  the  witness  to  speak 
as  to  the  custom  was  not  challenged  because  he  had  not  qualified 
himself.  The  objection  was  not  to -the  competency  of  the  witness, 
but  of  his  testimony.  It  is  too  late  to  raise  the  question  of  per- 
sonal disqualification  for  the  first  time  in  this  court.  Seliginan 
V.  Rogers,  21  S.  W.  Rep.  94  (division  No.  2,  at  this  term).  The 
ruling  of  the  court  was  made  squarely  upon  the  subject-matter  of 
the  proposed  evidence.  If  the  evidence  was  competent,  then  it 
was  error  to  exclude  it,  because  it  fully  met  the  requirement,  in 
that  the  inquiry  was  as  to  the  general  hours  of  business  in  Chicago, 
among  business  and  office  men.  The  question  itself  suggested 
its  materiality,  but  counsel,  unwilliug  to  risk  that,  went  fur- 
ther, and  made  the  offer  of  proof,  which  clearly  shows  it  was 
material,  thus  complying  with  the  rule  announced  in  Jack- 
son V.  Hardin,  83  Mo.  178,  186  ;  Thomp.  Bills,  302  ;  1  Daniel 
Neg.  Inst.,  §  601.  "When  the  presentment  is  at  the  place  of 
business  it  must  be  during  the  hours  when  such  places  are 
customarily  open,  or  at  least  while  some  one  is  there  competent 
to  give  answer.  It  is  only  when  presentment  is  at  the  residence 
that  the  time  is  extended  to  the  hours  of  rest."  Id.  603.  The 
rule  thus  announced  by  Mr.  Daniel  is  approved  by  the  other  text 
writers  on  commercial  law  generally.  The  question,  it  must  be 
remembered,  is  not  whether  a  demand  actually  made  on  Bancroft 
on  the  day  in  question  after  business  hours  would  be  good,  but  is 
a  call  at  his  business  office,  after  the  expiration  of  business  hours, 
after  it  was  closed  for  the  day,  with  no  other  effort  to  find  him,  a 
sufficient  presentment  to  dishonor  the  bill  and  hold  the  indorser? 
In  other  words,  can  a  party  invoke  the  right  to  this  constructive 
demand,  without  making  it  within  business  hours.'*  We  think 
that  both  reason  and  the  authorities  generally  hold  that  such 
a  presentment  is  not  sufficient  to  bind  the  indorser.  Dana  v. 
Sawyer,  22  Me.  244 ;  Parker  v.  Gordon,  7  East,  385  ;  Shed  v. 
Brett,  1   Pick.  412;  Baumgardner  v.  Reeves,  35  Pa.  St.  250; 

348 


CH.  XT.]  PROTEST.  ILL.   CAS. 

Swan  V.  Hodges,  3  Head,  251 ;  "Wiseman  v.  Chiappella,  23  How. 
368,  380;  Story  Bills  (4th  (d.).  §  236;  Bayley  Bills  &  N.  (5th 
ed.),  c.  7,  §  1,  p.  199,  The  rule  is  tersely  stated  by  Thompson, 
J.,  in  Bauragarten  v.  Reeves,  supra:  "  It  is  tlie  duty  of  a  notary 
when  he  receives  a  hill  or  note,  intended  to  be  protested,  to  make 
a  demand  of  the  party  primarily  lial)le,  at  his  usual  place  of  bus- 
iness, within  business  hours."  In  Elford  v.  Teed,  1  Maule  &  S. 
28,  Lord  Ellenl)orough,  C.  J.,  said:  "There  was  not  any  text 
writer  upon  whose  authority  a  presentment  of  a  bill  by  a  notary 
at  a  house  of  business,  after  it  was  closed,  could  be  sus- 
tainrd.  It  is  laid  down  in  Marius  that  it  must  be  made  during 
times  of  business,  at  such  seasonal ile  hours  as  a  man  is  bound  to 
attend,  by  analogy  to  the  lioral  juridicae  of  the  couris  of  justice." 
Mar.  Bills  (2d  rd.),  187.  To  this  line  of  authorities,  respond- 
ent opposes  the  case  of  Skelton  v.  Dustin,  92  J 11.  49,  54.  We 
have  examined  that  case  with  care,  and  we  cannot  find  anything 
in  the  decision  based  upon  the  facts  of  the  case  that  is  in  con- 
flict with  the  view  we  have  taken  of  the  law  on  this  subject. 
That  part  of  tiie  opinion  relating  to  the  point  under  discussion  is 
as  follows:  "  Ills  said  that  a  bill  of  exchange  should  be  presented 
for  payment  on  the  day  it  is  payable,  during  the  business  hours 
on  that  day  (Strong  v.  King,  35  111.  9)  ;  and  it  is  claimed  there- 
fore that  it  must  be  affirmatively  shown,  which  it  is  said  was  not 
done  in  this  case,  that  the  bill  was  so  presented  during  his  busi- 
ness hours.  The  only  evi<lei\ce  there  is  as  to  the  time  of  day  the 
bill  was  presented  for  payment  is  found  in  the  notarial  certificate 
of  protest,  which  states  that  the  notary,  after  the  close  of  bank 
hours,  presented  the  same  [the  bill]  at  the  office  of  W.  C.  Bar- 
rett &  Co.,  Indianapolis,  Indiana,  and  demanded  payment 
thereof,  the  lime  limited  for  payment  having  expired.  The  certifi- 
cate is  presumptive  evidence  of  presentment  during  the  proper 
hours  of  business.  These,  except  where  the  paper  is  due  from  a 
bank,  for  the  purpose  of  jjresenting  a  note  or  bill  for  payment, 
range  through  the  whole  day  down  to  bedtime  in  the 
evening."  Bank  v.  Hunt,  2  Hill,  G35  ;  Farnsworth  v.  Allen,  4 
Gray,  453;  Edw.  Bdls  &  N.  536,  marg.  "There  is  no  evi- 
ence  that  W.  C.  Barrett  &  Co.  were  bankers.  The  statement 
that  the  '  time  limited  for  payment  had  expired'  does  not  import, 
as  contended,  that  the  presentment  for  payment  was  after  the 
close  of  business  hours.  It  means  no  more,  we  think,  than  that 
payment  of  the  bill  had  become  due."  Toallof  which  we  assent. 
That  case  holds,  as  we  have  already  held,  that  the  certificate  of 
the  notary  was  prima  fac'c  evidence  that  the  note  was  presented 
"  during  tlie  proper  hours  of  business."  In  that  case  the  defend- 
ant relied  u[)on  the  objection  to  the  certificate.  In  this  case, 
when  that  objection  was  overruled,  defendant  offered  to  show 
affirmatively  that  the  presentment  was  not  within  business  hours. 
No  such  proof  was  offered  in  Skelton  v.  Dustin.  Nor  do  we 
question  that  in  different  communities  "  business  hours  range 
through  the  whole  day  down  to  bedtime."     It  is  for  this  reason 

345) 


ILL.   CAS.  PROTEST.  [CH.  XI. 

that  we  thiuk  it  is  competent  and  proper  to  allow  the  indorser  to 
show  what  range  they  took  in  the  city  of  Chicago  at  the  time  this 
presentment  was  made,  or  attempted  to  be  made.  Mr.  Daniel 
lays  it  duwn,  in  section  601,  Neg.  lust.,  that  "  it  is  for  the  jur}^ 
to  say  what  are  business  hours,  and,  in  fixing  them  otherwise 
than  in  reference  to  banks,  they  are  to  have  reference  to  the 
general  hours  of  business  at  the  place,  rather  tlian  the  custom 
of  any  particular  trade."  Certainly  the  authorities  cited 
by  the  supreme  court  of  IlHnois  in  no  way  mihtate  against 
the  views  we  have  taken.  In  Bank  r.  Hunt,  Judge  Cowen  begins 
his  opinion  with  the  statement  that  "  tlie  bill  of  exchange  in  this 
case  V  a-!  payable,  generally,  mentioning  no  place."  No  objection 
was  made  at  the  trial  that  the  presentment,  which  was  made  at 
No.  4  Wall  street,  where  the  survivor  transacted  business,  should 
have  been  at  his  residt^nce,  or  any  place,  "  nor  was  any  made  to 
the  manner  of  presentment,  or  the  day."  He  holds  that  the 
notarj-'s  certificaie  is  prima  facie  evidence  that  the  demand  was 
ma'le  at  a  proper  time  in  the  day.  If  an  improper  time,  it  was 
for  the  opposite  party,  by  cross-examiuntion  or  otherwise,  to  show 
it.  In  Farnsworth  v.  Allen,  4  Gray,  453,  no  place  of  payment 
was  named  in  tlie  note.  The  notary  on  the  last  day  of  grace  pre- 
sented it  to  the  maker  at  his  residence,  after  he  had  retired.  It 
was  held  good.  Bigelow,  J.,  said  :  "  The  note  declared  on,  not 
being  payable  at  a  bank,  or  at  any  place  where  business  was 
transacted  during  cei'tain  hours  in  each  day,  was  properly  pre- 
sented to  the  maker  at  his  residence  ;"  but  even  in  that  case  the 
learned  judge  held  that  such  a  note  ought  to  be  presented  within 
reasonable  hours,  and  he  concludes  that  9  o'clock  on  23d  August 
is  not  unreasonable,  when  it  was  found  necessary  to  drvie  nine 
miles  into  the  country  to  find  the  makers.  'Edw.  Bills  &  N.,  § 
716,  is  the  remaining  citation.  The  author  says:  "Where  a 
note  is  not  drawn  payable  at  a  particular  place,  or  at  a  bank,  a 
demand  may  be  made  upon  the  maker  at  his  residence  at 
any  time  before  the  usual  hours  of  rest."  But  a  ref- 
erence to  the  work  will  show  that  the  author  is  discussing 
at  this  place  the  right  of  the  maker  to  the  whole  day  in  which 
to  pay,  and  that  a  suit  brought  during  the  last  day  of  grace 
is  premature.  At  section  719,  in  discussing  the  point  we  have 
under  consideration,  he  says:  "When  payable  at  a  bank,  the 
note  should  be  presented  before  the  hour  of  closing  business  of 
that  kind  that  day.  *  *  *  or  when  payable  at  the  counting 
room,  office,  or  store  of  the  maker  or  acceptor,  they  should  be 
presented  there  within  the  usual  hours  of  business."  Judge 
Rapallo,  in  Bank  v.  Burton,  58  N.  Y.  430,  refers  to  Parker  v. 
Gordon,  7  East,  387,  and  Elford  v.  Teed,  1  Maule  &  S.  28,  as 
the  cases  upon  which  the  law  of  presentment  of  commercial  paper 
is  based.  Lord  P^llenborough  himself  qualified  his  own  opinion 
to  this  extent,  that  a  presentment  at  a  bank  after  banking  hours 
was  suflflcient,  provided  a  pei'son  was  stationed  there  by  tlie 
banker  to  return  an  answer.     That  case  and  Bank  v.  Hollister, 

350 


CH.  XI.]  PROTEST.  ILL.  CAS. 

17  N.  Y.  46,  stand  upon  their  own  peculiar  facts,  but  nowhere  is 
it  intimated  in  either  that  the  court  has  departed  from  the  general 
rule.  Woodruff,  J.,  in  Manufacturing  Co.  v.  Bishop,  3  E.  D. 
iSmith,  48,  commenting  upon  Garnett  v.  Woodcock,  1  Starkie, 
475,  says:  "It  proceeds  upon  ihe  distinct  ground  that  if  a 
l)anker  ai)point  a  person  to  attend,  in  order  to  give  an  answer,  a 
presentment  would  be  good  if  made  before  12  o'clock  at  night;  " 
but  he  insists  that  the  general  rule  is  not  at  all  repudiated  b}' 
that  case,  but  rather  affirmed.  See  authorities  cited,  loc.  cit. 
p.  54.  Our  conclusion  is  that  the  evidence  is  material  and  com- 
petent, and  the  court  commitied  reversible  error  in  excluding  it. 

2.  For  the  reason  that  the  evidence  was  admissible,  it  follows 
that  the  instruction  was  too  narrow,  in  that  it  did  not  require  the 
jury  to  find  that  the  note  had  been  presented  for  i)aymentto  the 
maker  within  business  hours  at  his  place  of  business,  but  only 
required  the  jury  to  lind  that  notice  of  iirotest  had  been  given  to 
defendant  HokUn.  His  liability  was  eonditioued  upon  the  proper 
demand  upon  John  D.  Bancroft. 

3.  The  remaining  i)oint  for  decision  is  one  of  pleading.  Under 
his  answer,  and  lo  sustain  the  third  paragraph  thereof,  defendant 
offered  John  D.  Bancroft,  as  the  maker  of  the  note,  as  a  witness. 
After  Bancroft  had  testified  tliatthe  note  in  suit  was  a  renewal  of 
two  former  notes  given  by  him  to  one  Warien  H.  Leland,  aggre- 
gating §G,8U2.0D,  and  had  testified  that  fraud  had  been  perpe- 
tratid  on  him  by  Leland  in  obtaining  said  notes,  and  that  Clough, 
the  i)laintiff,  knew  it,  when  he  reduced  the  notes  to  S4,000,  the 
amount  of  the  one  in  suit,  the  court,  over  tlie  ol)jection  of  coun- 
sel for  defendant,  permitted  counsel  for  plaintiff  to  take  the  wit- 
ness, and  identify  four  letters  from  the  witness  to  Clough,  and 
read  the  same  to  the  jury.  In  these  letters  Bancroft  agrees  to 
give  the  §4,000  note  in  suit  and  6500  in  cash  for  the  two  notes 
previously  given  to  Leland,  June  23,  188S.  He  tells  Clough  in 
his  letters  that  Leland  luid  cheated,  defrauded  and  duped  him 
(Bancroft),  but  he  disliked  to  see  Clough  suffer,  and  accordingly 
offers  this  settlement.  These  negotiations  result  in  Clough 
taking  this  note,  and  surrendering  the  old  notes  and  $10,000 
stock  in  tlie  Chippewa  Lumber  Company.  Defendant,  after  all 
this  evidence  wtis  in,  without  objection  from  plaintiff,  offered  to 
show  that  Clough  and  Leland  were  i  artn»  rs  in  a'l  these  transac- 
tions, and  that  Clough  was  a  i)arty  to  the  fraud  by  which  Leland 
obtained  the  original  notes,  but  that  Bancroft  was  ignorant  of 
these  facts  when  lie  gave  the  note  in  suit  ;  and  he  made  this  pro- 
posal :  "  I  jiiopose  to  show  by  this  witness  that  the  consideration 
of  the  original  nolo  wholly  failed,  and  were  without  considera- 
tion, and  that  at  the  time  they  were  given  the  original  notes  were 
given  for  jiroperty  or  an  interest  in  property  sold  by  Leland  to 
Bancroft;  that  Clough  was  part  owner  anil  a  partner  of  Leland  at 
the  time  of  tiie  sale  of  lliat  property  to  Bancroft,  and  was  acting 
for  and  in  behalf  ( {  Leland  at  the  time  this  property  was  sold, 
an<l  that  tliese  not(  s  were  then  transferred  to  Clough  ;   and  that 

351 


ILL.   CAS.  PROTEST.  [CH.  XI. 

Bancroft,  without  notice  of  the  fact  at  that  time  of  the  extent  to 
which  he  had  been  deceived  as  to  the  consideration  of  the  note, — 
as  to  the  amount  of  property  which  was  turned  over  in  payment 
of  the  note, —  made  this  settlement,  and  gave  this  new  note  for 
the  others  to  Clough  ;  and  that  Clough  had  full  notice  at  the  time 
the  original  notes  were  given,  in  law  and  in  fact,  of  the  consid- 
eration of  these  notes,  as  well  as  the  note  that  was  in  suit. 
We  offer  to  prove  that."  To  which  plaintiff  objected  as  in- 
competent, and  not  pleaded  in  the  answer.  Which  objection  the 
court  sustained,  and  defendant  duly  excepted.  Counsel  for  de- 
fendant then  went  further  and  offered  to  show  that  the  original 
notes  were  given  for  property  which  Leland  represented  was  in 
existence,  but  did  not  exist;  that  he  did  not  have  the  property; 
that  Bancroft  relied  on  his  representations,  and  gave  the  note  for 
it ;  that  the  property  was  represented  to  be  a  new  sawmill,  and 
certain  lumber  and  shingles,  and  certain  timber  in  the  forest,  at 
Point  an  Frene,  Mich.  "These  notes  were  given  in  considera- 
tion of  the  sale  of  this  alleged  amount  of  properly  ;  that  Mr. 
Bancroft  was  ignorant  himself  as  to  the  value  of  this  property 
or  the  amount  of  it,  and  was  deceived  and  swindled  by  these 
representations  ;  and  that  he  gave  these  notes  after  that.  When 
these  notes  became  due,  they  turned  up  in  the  possession  of  and 
in  the  custody  of  Clough,  who  claimed  to  be  the  owner  of  them. 
He  then  supposed  tliat  Clough  had  l)ought  them  in  good  faith, 
and  made  this  settlement  with  him  by  giving  him  a  new  note, 
when  Clough,  as  a  matter  of  fact,  was  a  partner  in  this,  all  the 
time,  with  Leland.  That  is  the  offer.  The  Court:  I  don't  think 
tlie  answer  is  sufficient  to  raise  any  question  of  fraud,  and  the 
offer  is  excluded.  (To  which  action  of  the  court  in  refusing  to 
admit  the  testimony  offered,  the  defendant  then  and  there  duly 
excepted.)"  The  answer  alleged  tliat  the  note  in  suit  was 
obtained  from  Bancroft,  the  maker,  by  fraud  and  misrepresenta- 
tion, and  without  consideration,  and  tliat  plaintiff  knew  it  had 
been  so  obtained,  and  that  he  never  paid  value  for  the  same. 
Was  it  competent,  under  such  an  answer,  to  prove  the  facts 
which  defendant  offered  to  prove  in  regard  to  the  original 
notes?  We  think  not.  The  pleader  saw  fit  to  confine  h  s 
charge  of  fraud  to  the  note  in  suit.  Had  he  only  offered  to  show 
that  the  note  in  suit  was  obtained  by  fraud,  the  evidence  would 
have  been  competent,  under  his  general  allegation  of  fraud, 
under  the  rule  in  Edgell  v.  Sigerson,  20  Mo.  494,  but  it  is  not 
reasonable  that  under  such  an  answer  the  plaintiff  would  expect 
to  be  prepared  to  meet  charges  of  fraud  in  a  remote  transaction, 
out  of  which  this  note  finally  grew,  and  to  the  obtaining  of  which 
plaintiff  was  ostensibly,  at  least,  a  stranger.  If  defendant  de- 
sired to  show  that  the  note  in  suit  had  not  other  consideration 
than  the  two  notes  to  Leland  ;  that  plaintiff  was  in  fact  a  party  to 
a  fraud  in  obtaining  them  ;  and  that  the  said  two  notes  were 
without  consideration,  or  had  wholly  failed, —  it  was  his  duty  by 
an  appropriate  answer  to  state  these  facts,  and  advise  the  plain- 

352 


CII.  XI.]  PROTEST.  ILL.  CAS. 

tiff  of  the  defense  on  which  he  expected  to  rely.  The  present 
answer  is  not  siifhcient  for  that  purpose,  either  at  common  law 
or  under  the  Code,  and  the  trial  court  properly  so  held.  It 
may  be  as  well  to  remark  that  the  cases  of  Edgell  v.  Sigerson, 
20  Mo.  494;  Smalley  v.  Hale,  37  Mo.  102,  and  Fox  v.  Web- 
ster, 46  Mo.  181,  have  never  been  overruled,  but  they  only 
held  that  pleas  of  fraud  in  general  terms  were  good  in  answer, 
and  when  the  fraud  charged  referred  only  to  matters  stated  in 
the  petition.  The  bare  allegation  of  fraud  has  never  been  sus- 
tained as  sufficient  in  a  petition,  under  our  code,  either  in  law  or 
equity.  We  have  always  required  the  facts  constituting  the 
fraud  to  be  averred.  A  satisfactory  reason  for  the  distinction 
between  an  answer  or  other  pleading  and  a  petition,  in  this 
respect,  would  be  hard  to  give.  The  writer  will  not  attempt  one. 
BHss  Code  PI.,  §  339.  The  cases  of  Reed  v.  Bott,  100  Mo.  62 ; 
12  S.  W.  Rep.  a47,  and  14  S.  W.  Rep.  1089;  and  Hoester  v. 
Sammelmann,  101  Mo.  619;  14  S.  W.  Rep.  728,  were  causes  in 
equity,  and  what  was  said  in  Ihera  in  regard  to  pleading  was  in- 
tended to  refer  to  pleading  iti  equity,  thougli  neither  of  the  judges 
who  wrote  them  thought  necessary  to  advert  to  the  distinction. 

It  becomes  unnecessary  to  discuss  the  other  propositions  refei'- 
red  to  in  the  brief  of  respondents,  for  the  reason  that  we  cannot 
anticipate,  either  that  defendant  will  not  tender  back  the  old 
notes  and  Chippewa  Lumber  Company  stock,  nor  that  plaintiff 
will  rely  upon  the  compromise.  It  will  be  ample  time  to  pass 
upon  those  questions  when  they  are  fairly  in  the  records.  The 
judgment  is  reversed,  and  the  cause  remanded  for  a  new  trial 
in  accordance  herewith.  All  concur,  except  Sherwood,  J.,  who 
dissents,  and  Barclay,  J.,  who  expresses  his  views  separateU'. 
Barclay,  J.,  concurs  in  the  judgment  on  the  ground  stated  in  the 
first  paragraph  of  the  opinion  of  the  court,  but  dissents  from  the 
third  paragraph,  and  refers  to  his  opinion  in  Reed  v.  Bott  (1889), 
100  Mo.  67;  12  S.  W.  Rep.  347,  and  14  S.  W.  Rep.  1089,  for  a 
statement  of  his  views  upon  the  point  of  difference. 

Barclay,  J.  (dissenting).  As  I  do  not  concur  in  the  conclu- 
sion reached  that  the  judgment  in  this  cause  should  be  reversed, 
I  herewith  file  as  reasons  for  my  dissent  herein  the  original 
opinion  filed  by  me  in  Division  No.  1  of  this  court,  and  which  re- 
ceived at  the  time  the  unanimous  assent  of  all  the  members  of 
that  division.  That  opinion  has  been  followed  sub  modo  by  the 
majority  as  to  paragraph  1,  which  in  effect  declares  that  you 
cannot  plead  one  fraud  and  prove  another;  but  when  the  major- 
ity come  to  the  question  discussed,  both  in  the  brief  of  plaintiff 
and  in  that  of  defendant  in  his  motian  for  rehearing,  as  to  the 
necessity  of  rescission  or  offering  to  rescind  the  compromise 
contract,  in  order  to  make  the  plea  of  fraud  good,  as  all  the 
authorities  hold,  it  is  said:  "  It  becomes  unnecessary  to  discuss 
the  other  propositions  referred  to  in  the  brief  of  respondent,  for 
the  reason  that  we  cannot  auticii)ate,  either  that  defendant  will 
not  tender  back  the  old  notes  and  Chippewa  Lumber  Company 

26  353 


ILL.  CAS.  PROTEST.  [CH.  XI. 

stock,  nor  that  plaintiff  will  rely  upon  the  compromise.  It  will 
be  ample  time  to  pass  upon  those  questions  when  they  are  fairlj- 
in  the  record."  But  if,  as  the  authorities  show,  after  a  contract 
of  compromise  has  been  entered  into,  the  fraud  in  securing  that 
contract  cannot  be  successfully  pleaded  without  being  coupled 
with  a  plea  of  rescission  or  offer  to  rescind  that  contract,  and  as 
both  parties  discuss  the  point  in  their  briefs,  it  seems  to  me 
it  was  absolutely  necessary  for  this  court  to  rule  the  point, 
unless  it  is  thought  advisable  to  compel  the  parties  to  come  back 
again  to  this  court,  in  order  to  learn  whether  a  plea  of  fraud 
in  making  a  contract  is  good,  uncoupled  with  a  return  or  offer  to 
return  that  which  was  obtained  under  that  fraudulent  contract. 
Here,  we  have  the  plaintiff  contending  that  rescission  or  offer  to 
rescind  is  absolutely  necessary ;  the  defendant  denying  this :  in 
such  circumstances  of  antagonism,  it  really  does  not  seem  that  it 
would  require  any  very  great  stretch  of  either  inference  or 
imagination  to  "  anticipate  that  defendant  will  not  tender  back 
the  old  notes,"  etc.,  or  that  plaintiff  will  rely  iipon  the  compro- 
mise contract.  But  the  necessity  of  such  return  or  offer  to  return 
is  "  fairly  in  the  record,"  if  it  be  true  that  in  the  circumstances 
stated  the  plea  of  fraud  is  not  good,  where  it  stands  alone,  un- 
coupled with  the  averment  aforesaid.  And  where  a  petition  or 
answer  is  bad  on  its  face,  though  no  objection  be  raised  to  its 
sufficiency,  this  court  of  its  own  motion  will  raise  and  rule  the 
point  here  for  the  first  time.  Walker  v.  Bradbury,  57  Mo.  66  ; 
Smith  V.  Burrus,  106  Mo.  loc.  cit.  97;  16  S.  W.  Rep.  881,  and 
cases  cited. 

Liability  of  Collecting  Bank  for  Failure  to  Protest  — 
AVhat  Protest  Includes  —  When  Protest  Necessary  in 
Case  of  Inland  Bills  and  Notes. 

Wood  River  Bank  v.  First  Nat.  Bank,  36  Neb.  744  (55  N.  W.  239). 

Error  to  district  court.  Hall  county ;  Harrison,  Judge. 

Action  by  the  First  National  Bank  of  Omaha  against  the  "Wood 
River  Bank.  Plaintiff  had  judgment,  and  defendant  brings  error. 
Affirmed. 

Post,  J.  This  was  an  action  in  the  district  court  of  Hall  county 
to  recover  for  tlie  failure  of  the  defendant  below,  plaintiff  in 
error,  to  give  notice  of  the  dishonor  of  certain  checks  received 
by  it  for  collection  from  the  plaintiff  below,  by  reason  of  which 
certain  indorsers  thereon  were  discharged,  to  the  damage  of  the 
latter.  The  facts,  as  they  appear  from  the  pleadings  and  proofs, 
are  substantially  as  follows:  About  the  11th  day  of  January, 
1887,  at  Ravenna,  in  Buffalo  county,  one  Hildebrandt  drew  11 
checks,  to  the  order  of  as  many  different  paj-ees,  upon  the 
defendant,  the- Wood  River  Bank,  doing  business  at  Wood  River, 
Hall  county,  amounting,  in  the  aggregate,  to  §737.28.  The 
checks  aforesaid  were  all  cashed  by  the  Farmers'  Bank  of 
Ravenna  upon  the  indorsement  of  the  several  |)ayees,  and  upon 
the  day  above  named  were  transmitted  by  it,  witli  proper  indorse- 

'  354 


CH.  XI.]  PROTEST.  ILL.   CAS. 

ments,  for  collection,  to  the  First  National  Bank  of  Omaha.  On 
the  evening  of  the  next  day,  January  12lh,  the  last-named  bank 
forwarded  ihem  by  mail,  ])roperly  indorsed,  for  collection,  to  the 
defendant  bank,  at  Wood  River,  with  instructions  lo  protest  un- 
less promptly  paid.  The  evidence  is  conflicting  with  respect  to 
the  time  of  the  receipt  of  the  checks  by  the  defendant.  If  we 
regarded  that  question  as  decisive  of  the  case,  we  would  feel  con- 
strained to  resolve  it  in  favor  of  the  defendant,  notwithstanding 
the  finding  of  the  jury  that  they  were  received  by  it  on  tlie  evening 
of  the  13th.  Both  Hockenberger,  the  cashier,  and  Hallister,  the 
president,  testify  positively  that  the  checks  were  received  by  the 
bank  on  the  afternoon  of  the  14th.  But  the  judgment  is  right, 
nevertheless.  It  is  evident  from  their  testimony  that  the  checks 
were  received  at  the  bank  before  the  close  of  iis  business  on  the 
14th  ;  that  they  were  opened  and  examined  b}'  the  witnesses,  who 
were  both  aware  that  there  were  no  funds  to  the  credit  of  the 
drawer,  and  who  delayed  giving  notice  or  taking  any  steps  for 
the  protection  of  the  plaintiff  below,  in  order  to  enable  Hilde- 
brandt  to  provide  funds  to  balance  his  account  the  next  day.  It 
is  admitted,  also,  that  the  defendant  bank  continued  to  pay 
Hildebrandt's  checks  in  favor  of  home  customers,  although  no 
entries  appear  to  his  credit  on  its  books  subsequent  to  the  loth. 
'I'he  jury  were  warranted,  upon  the  admitted  facts,  in  finding  tiiat 
the  bank  intended  to  accept  the  bills,  and  that  by  its  delay  it 
became  liable  thereon.     Bank  v.  McMichael,  lOG  Pa.  St.  4 GO. 

Checks  like  those  in  question  are  to  be  regaided  ds  inland  bills 
of  exchange.  Therefore,  protest  is  not  essential  in  order  to  pre- 
serve tiie  rights  of  antecedent  parties  (Hughes  v.  Kellogg,  3  Neb. 
194;  Daniel  Neg.  Inst.  026;  Chit.  Bills  [8th  ed.],  500,  501), 
although  the  holder  is  required  to  exercise  the  same  degree  of 
diligence  in  giving  notice  of  dishonor  as  in  cases  where  a  formal 
protest  is  necessary.  The  term  "  ijrotest,"  as  applied  to  inland 
bills,  is  used  in  its  popular  sense,  and  means  the  steps  essential 
in  order  to  charge  the  drawer  and  indorsers.  Daniel  Neg.  Inst. 
*J29  ;  Ayrault  v.  Bank,  47  N.  Y.  570.  It  was  the  duty  of  the 
defendant  bank  to  promptly  give  notice  of  the  non-payment  of  the 
checks,  either  directl}'  to  the  bank  from  which  the}^  were  received, 
or  to  place  thein  in  the  hands  of  a  notary  public  for  protest  and 
notice.  Bank  checks,  unlike  bills  of  exchange,  are  due  on  theday 
they  are  presented  for  jiayment,  ami  not  entitled  to  days  of  grace. 
Boone  Banking,  1G5,  2.")0 ;  Morrison  v.  Bailey,  5  Ohio  St.  13; 
Chami)ion  V.  Gordon,  70  Ta.  St.  474  ;  Fletcher  v.  Thompson,  55  N. 
II.  308;  2  Amer.  &  Eng.  Enc.  Law,  398.  The  checks  in  question 
were  dishonored  on  the  14th,  when  received  through  themail,  and 
payment  refused  for  wantof  funds.  Both  the  presidentand  cash  er, 
the  only  managing  ollicers  of  the  bank,  knew  that  Hildebrandt's 
account  was  overtlrawn.  There  was,  therefore,  no  occnsion  for 
time  to  examine  their  books.  It  is  said  by  Chancellor  Kent  (3 
Kent  Comin.  105):  "  According  to  modern  doctrine,  the  notice 
must  be  given  by  the  first  direct  and  regular  conveyance.     This 

355 


ILL.  CAS.  PROTEST.  [CH.  XI. 

means  the  first  mail  that  goes  after  the  day  next  to  the  third  day 
of  grace,  so  that  if  the  third  day  of  grace  be  on  Thursday,  and 
the  drawer  and  iudorser  reside  out  of  town,  the  notice  may  be 
sent  on  Thursday,  but  must  be  put  into  the  post  oflSce  or  mailed 
on  Friday,  so  as  to  be  forwarded  as  soon  as  possible  thereafter." 

The  next  inquiry  is  whether  by  delivering  the  checks  to  the 
notary  public  on  the  15th  for  protest,  the  defendant  discharged 
its  duty  to  the  plaintiff,  for  it  is  clear,  upon  authority,  that  that 
was  the  latest  day  on  which  notice  could  have  been  given  in  order 
to  charge  the  indorsers.  The  rule  sanctioned  by  the  weight  of 
authority  is  conceded  to  be  that  a  bank  which  places  paper  in  the 
hands  of  a  notary  public,  with  directions  to  proceed  in  such  man- 
ner as  to  protect  the  rights  of  the  beneficial  owner  and  indorsers, 
will  not  be  held  liable  for  the  failure  of  the  notary  to  discharge  his 
duty.  See  Boone  Banking,  205  ;  2  Amer.  &  Eng.  Enc.  Law, 
113.  But  tliis  case  cannot  be  held  to  be  within  the  rule  just 
stated.  Here  the  notary  was  the  president  and  managing  officer 
of  the  bank,  and  who,  being  aware  of  the  dishonor  of  the  checks 
on  the  14th,  did  not  protest  them  for  nonpayment,  or  notify  the 
plaintiff  or  other  indorsers  of  that  fact,  until  the  17th.  It  is 
evident,  too,  that  the  cashier  was  aware  of  the  dereliction  of  the 
president,  for  the  checks  appear  to  have  remained  in  the  bank 
during  all  the  time,  and  whatever  was  done  by  the  latter  by  wa}' 
of  noting  protest,  giving  notice,  etc.,  was  with  the  knowledge  of 
the  former.  It  is  true  the  16th  was  Sunday,  but  the  default 
occurred  on  the  15th.  It  was  the  duty  of  the  notary,  on  that  day, 
to  notify  the  plaintiff,  by  mail,  of  the  dishonor  of  the  paper. 
The  failure  to  protect  the  plaintiff  as  an  iudorser  is  directly 
attributable  to  the  fault  of  the  managers  of  the  bank,  and  it  will 
not  be  permitted  to  take  refuge  behind  the  notary,  and  to  inter- 
pose his  negligence  as  a  defense.  Upon  the  facts  of  this  case  the 
notary  will  not  be  held  to  be  the  agent  of  the  plaintiff,  but  rather 
of  the  defendant.     Bank  v.  Barksdale,  36  Mo.  563. 

2.  The  plaintiff  below  assumed  the  burden  of  proving  the 
solvency  of  the  first  indorsers,  the  payees  of  the  several 
checks.  For  that  purpose,  Mr.  Davis,  the  cashier  of  the  Farm- 
ers' Bank  of  Ravenna,  was  called  as  a  witness,  and  testified  that 
he  was  acquainted  with  the  financial  standing  of  the  parties 
named,  and  that  he  considered  them  good  for  the  amounts  named 
in  the  checks  bearing  their  respective  indorsements.  From  his 
cross-examination  it  appeared  that  one  or  more  of  them  were 
somewhat  embarrassed  financially.  It  is  now  urged  that  there  is 
not  sutficient  evidence  of  the  solvency  of  the  indorsers,  hence  it 
cannot  be  said  that  the  plaintiff  has  been  damaged.  This  argu- 
ment is  fully  answered  b}^  the  opinion  of  Judge  Lake  in  Steele  v. 
Russell,  5  Neb.  211.  The  fact  that  the  indorsers  may  have  been 
unable  to  meet  all  obligations  at  maturity  does  not  conclusive!}' 
establish  their  insolvency,  such  as  to  constitute  a  defense  in  this 
action.  The  judgment  of  the  district  court  is  right,  and  is 
affirmed.     The  other  judges  concur. 

356 


> 


-  CHAPTER     XII. 

NOTICE  OF   DISHONOR. 

Section  130.  Necessity  of  notice. 

131.  Who  may  give  the  notice. 

132.  To  whom  notice  should  be  given. 

133.  The  time  allowed  for  giving^otice. 

134.  Manner  of  giving  notice,  when  important. 

135.  Manner  of  giving  notice  where  parties  to  be  notified  reside 

in  the  same  place. 

136.  Personal  notice,  how  and  when  served. 

137.  Manner  of  serving  notice  on  persons  residing  elsewhere. 

138.  What  is  meant  by  "residing  in  the  same  place." 

139.  Form  and  requisites  of  the  notice  of  dishonor. 

140.  Allegation  and  proof  of  notice. 

§  130.  Necessity  of  notice.  —  Whenever  a  bill  or  note  is 
dishonoied  })y  a  refusal  of  the  drawee  or  maker  to  accept 
or  pay,  it  becomes  the  duty  of  the  holder,  after  making 
presentment  and  securing  protest,  whenever  that  is  neces- 
sary, to  give  immediate  notice  of  the  dishonor  to  all  second- 
ary obIigf)rs  —  the  drawer  and  indorsers  —  whom  he  wishes 
to  hold  liable.  The  liability  of  these  parties  depends  upon 
the  full  perlormance  of  the  contlition,  that  the  holder  has 
made  presentment,  and  given  the  required  notice  of  non- 
payment. If  the  condition  is  broken  by  the  failure  to  give 
the  notice  to  the  party,  whom  the  holder  wishes  to  hold 
liable,  such  'drawer  or  indorser  is  completely  discharged, 
not  only  from  all  liability  on  the  bill  or  note,  but,  likewise, 
on  the  original  contract,  in  settlement  of  which  the  i)ill  or 
note  was  issued  or  indorsed.^     Notice  is  not  required  to  be 


'  Musson  V.  Lake,  4  How.  2G2;  Phipps  v.  Harding,  70  Fed.  4G8;  17  C. 
C.  A.  203;  Smith  u.  Miller,  43  N.  Y.  171  (3  Am.  Rep.  G90) ;  Shipman  v. 
Cook,  IG  N.  J.  Eq.  (1  C.  E.  Gr.)  251 ;  Leonard  v.  Olson  (Iowa,  '97),  G8  N. 
W.  G77;  Allan  v.  Eldred,  50  Wis.  136  (6  N.  W.  565)  ;  Bettertou  v.  Roope, 
3  Lea,  215. 

357 


§    131  NOTICE    OF    DISHONOR.  [CH.  XII. 

giveu  to  the  acceptor  of  u  bill  or  maker  of  a  note,*  and  to 
no  one,  if  the  bill  or  note  is  for  any  reason  non-negotiable.^ 

§  131.  Who  may  give  the  notice. —  In  order  that  a 
notice  of  dishonor  may  be  effective,  it  must  be  given  by 
a  party  to  the  bill  or  note,  or  the  re[)resenlative  of  such  a 
party.  A  total  stranger  to  the  paper  and  to  the  parties 
cannot  give  the  notice.^  Where  a  representative  or  agent 
of  a  party  to  the  paper  gives  the  notice,  he  must  be  duly 
authorized ;  but,  being  authorized,  he  may  give  it  either  in 
his  own  name,  or  in  that  of  his  principal.^ 

The  holder  need  only  give  notice  to  the  last  indorser; 
and  if  the  drawer  and  prior  indorsers  do  not  receive  notice 
from  any  authorized  source,  they  are  discharged.  But  if 
the  last  indorser,  who  receives  notice,  gives  notice  for  his 
own  protection  to  the  prior  indorsers  and  drawer,  as  he  has 
a  right  to  do;  his  notice  to  them  will  not  only  preserve 
their  liability  on  the  paper  for  his  own  benefit,  to  be  en- 
forced when  ho  is  required  to  make  his  own  indorsement 
good  to  the  holder;  but  it  will  inure  to  the  benefit  of  the 
holder,  who  can  then  sue  the  drawer  and  prior  indorsers, 
as  if  he  or  his  agent  had  given  to  them  the  required  notice. 
But  before  a  later  indorser  can  give  notice,  so  as  to  bind 
the  parties,  either  to  himself  or  to  the  holder,  notice  must 
have  been  sent  to  him.^     On  the  other  hand,  i.f  the  holder 

1  Marion  Nat.  Bk,  v.  Phillips  Admr.  (Ky.).  35  S.  W.  910;  Pritchard 
V.  Smith,  77  Ga.  463;  Miller  v.  Clendenin,  42  \V.  Va.  416  (-^6  S.  E.  512). 
See  ante,  §§  92,  114. 

2  Pitman  v.  Breckenridge,  3  Gratt.  127,  and  see  Cundy  v.  Marriott,  1 
B.  &  Ad.  696. 

3  Stanton  v.  Blossom,  14  Mass.  116  (17  Am.  Dec.  198);  Chanvine  v. 
Fowler,  3  Wend.  173;  Meise  v.  Newman,  78  Hun,  428;  Jubiata  Bk.  v. 
Hale,  16  Serg.  &  R.  157  (16  Am.  Dec.  558)  ;  Ex  parte  Barclay,  7  Ves.  598.  . 

*  Harrison  v.  Euscue,  15  M.  &  W.  231  ;  Shed  v.  Brett,  1  Pirk.  401  (11 
Am.  Dec.  209);  East  Haddara  Bk.  v.  Scoville,  12  Conn.  303;  Sraedes  v. 
Utica  Bk.,  20  Johns.  372;  Cowperlhwaite  v.  Sheflield,  1  Sandf.  416;  Ashe 
V.  Beasley  (N.  D  ),  69  N.  W.  188;  Renick  v.  Robbins,  28  Mo.  339;  Bank  of 
Missouri  v.  Vaughn,  36  Mo.  90;  Swayze  v.  Britton,  17  Kans.  629;  Drex- 
ler  V.  McGlynn,  99  Cal.  143  (33  P.  773). 

5  Chapman  v.  Keane,  3  Ad.  &  El.  193;  Boteler  v.  Dexter,  20  D.  C.  26; 
Bachellor  v.  Priest,  12  Pick.  399;  City  N.  B.  v.  Clinton  Co.  N.  B.,  49  Ohio 
358 


CH.  XII.]  NOTICE    OF    DISTIONOIJ.  §    132 

has  notified  the  drawer  and  all  the  indorsers,  the  notices 
will  inure  to  the  benefit  of  any  one  of  the  intermediate 
indorsers,  who  is  compelled  to  pay  the  hill  or  note.^  It 
has  been  hehl  that  the  acceptor  of  a  bill  or  the  maker  of 
a  note  may  give  the  notice. ^ 

If  the  holder  be  dead,  his  personal  representative  must 
give  the  notice,  within  a  reasonable  time  after  his  appoint- 
ment and  qualification.^ 

§  132.  To    whom    notice    should    be    given.  —  All    the 

parties,  secondarily  liable,  whom  the  holder  wishes  to  hold 
liable,  must  be  notified.  And  this  is  true,  even  of  an 
indorser  for  collection  only.^  And  whenever  the  circum- 
stances require  that  demand  should  be  made  after  maturity, 
where  there  has  been  an  indorsement  and  transfer  after 
maturity,  notice  must  be  given  to  the  overdue  indorser, 
as  well  as  to  the  indorsers  be-fore  maturity.^  But  wher- 
ever presentment  has  been  made  at  maturity,  and  proper 

St.  351  (30  N.  E.  985);  Stafford  v.  Yates,  18  Johns.  327;  Aldine  Mfg.  Co. 
V.  Warner,  96  Ga.  370  (23  S.  E.  404);  Renshaw  v.  Triplett,  23  Mo.  213; 
Stix  V.  Matthews,  63  Mo.  371;  Jarnlgen  v.  Stratton,  95  Tenn.  619  (32  S. 
W.  625);  Swayze  v.  Brilton,  17  Kans.  627;  Big  Sandy  N.  B.  v.  Chilton, 
40  W.  Va.  491  (21  S.  E.  774);  Wood  v.  Callaghan,  61  Mich.  402(28  N.  W. 
162). 

1  Beale  v.  Parrish,  20  N.  Y.  407  (75  Am.  Dec.  414). 

^  Chapman  v.  Keane,  3  Ad.  &  El.  193;  Brailsford  v.  Williams,  15  Md. 
150  (74  Am.  Dec.  559);  French  v.  Jarvis,  29  Conn.  347  (notice  by  holder 
enuring  to  indorse  after  maturity) ;  Fir.st  N.  B.  v.  Ryerson,  23  Iowa,  508; 
Johnson  v.  Harth,  1  Bailey,  482;  Glasgow"  v.  Pralte,  8  Mo.  336  (40  Am. 
Dec.  142;.  But  see  Sebrte  Deposit  Bk.  v.  Moreland,  96  Ky.  150  (28  S. 
W.  153). 

3  White  V.  Stoddard,  11  Gray,  258  (71  Am.  Dec.  711). 

*  Scott  V.  Lifford,  9  East,  347;  Bank  of  Missouri  v.  Vaughn,  36  Mo. 
90;  Whittier  v.  Collins,  15  R.  I.  44;  23  A.  39  (although  secured  by  col- 
laterals) ;  Sibley  v.  Am.  Exch.  Nat.  Bank,  97  Ga.  126  (25  S.  E.  479) ; 
McNeil  V.  Wyatt,  3  Humph.  125;  Rosson  v.  Carroll,  90  Tenn.  90  (16  S. 
W.  66);   Fiske  v.  Pratt,  154  Mass.  367  (28  N.  E.  282). 

*  Colt  V.  Barnard,  18  Pick.  260  (29  Am.  Dec.  580);  Lockwood  v. 
Crawford,  18  Conn.  361;  Leavitt  v.  Putnam,  3  N.  Y.  494  (53  Am.  Dec. 
322);  Fell  v.  Dial,  14  S.  C.  247;  Beebe  v.  Brooks,  12  Cal.  308;  Shelby  ». 
Judd,  24  Kans.  161 ;  Graul  v.  Strutzel,  53  Iowa,  712  (6  N.  W.  119) ;  Smith 
V.  Caro,  9  Oreg.  278;  Hart  v.  Eastman,  7  Minn.  74.  See  PIcklar  v.  Har- 
lan, 75  Mo.  678;  Baker  r.  Robinson,  63  N.  C.  191. 

359 


§   132       •  NOTICE    or   DISHONOR.  [CH.  XII. 

protest  has  been  made  and  notices  issued  to  drawer  and 
indorsers,  a  subsequent  transfer  by  indorsement  would  not 
require  a  second  presentment,  or  issue  of  notice. ^  One 
notice  to  an  indorsing  firm  and  received  by  one  partner 
binds  all  the  partners,  whether  the  default  occurred  before 
or  after  the  dissolution  of  the  partnership. ^  But  if  there 
are  two  or  more  independent  joint  indorsers,  notice  should 
be  sent  to  each  of  them  ;  notice  to  one  does  not  even  bind 
that  one.^ 

The  notice  may,  of  course,  be  sent  to  the  agent  of  a 
drawer  or  indorser,  if  such  agent  be  fully  authorized  to 
receive  such  notices  and  bind  his  principal  thereby.*  If 
the  party  to  be  notified  has  made  an  assignment  in  bank- 
ruptcy or  for  the  benefit  of  creditors,  it  is  proper,  although 
it  is  apparently  doubtful  whether  it  is  necessary,  for  the 
notice  to  be  sent  to  the  assignee.^ 

If  the  drawer  or  indorser  be  dead,  as  long  as  the  party 
notifying  does  not  know  of  such  death,  the  notice  is  good, 
if  sent  to  the  deceased  party.  If  his  death  is  known,  but 
no    personal    representative    has    yet  been  appointed,  the 

1  Libby  v.  Pierce,  47  N.  H.  309;  French  v.  Jarvis,  29  Conn.  347;  St. 
John  V.  Roberts,  31  N.  Y.  441  (88  Am.  Dec.  287);  Williams?;.  Matthews, 
3  Cow.  252;  Scott  v.  First  N.  Bk.,  71  Ind.  445. 

2  Rhett  V.  Pole,  2  How.  457;  Hubbard  v.  Matthews,  54  N.  Y.  43,50 
(13  Am.  Rep.  562);  Slocum  v.  DeLizardi,  21  La.  Ann.  355  (99  Am.  Dec. 
740);  Fourth  Nat.  Bank  v.  Henschen,  52  Mo.  207;  Hume  v.  Watt,  5 
Kans.  34. 

3  Union  Bk.  v.  Willis,  8  Met.  504,  512  (41  Am.  Dec.  541);  Shepard  v. 
Hawley,  1  Conn.  367  (6  Am.  Dec.  244) ;  Hubbard  v.  Mathews,  54  N.  Y. 
43,  50  (13  Am.  Rep.  562);  Bk.  of  Chenango  v.  Root,  4  Cow.  126;  Sayre  v. 
Frick,  7  Watts  v.  S.  383  (62  Am.  Dec.  249) ;  Miser  v.  Trovinger,  7  Ohio 
St.  281;  Seligman  v.  Gray,  66  Mich.  341  (33  N.  W.  510);  Boyd  v.  Orton, 
16  Wis.  95. 

4  Fassin  v.  Hubbard,  55  N.  Y.  465;  Chouteau  v.  Webster,  6  Met.  1 
(39  Am.  Dec.  705) ;  N.  Y.  &  Ala.  C.  Co.  v.  Selma  Sav.  Bk.,  51  Ala.  305 
(23  Am.  Rep.  552) ;  Louisiana  State  Bank  v.  EUery,  16  Mart.  N.  S.  (La.) 
87;  Wilkins  v.  Commercial  Bank,  6  How.  (Miss.)  217;  Wilson  v.  Senier, 
14  Wis.  380.     See  Howard  Bank  v.  Carson,  50  Md.  18. 

5  Rhode  V.  Proctor,  4  B.  &  C.  517;  Am.  Nat.  Bank  v.  Junk  &c.  Mfg. 
Co.,  94  Tenn.  624  (30  S.  W.  753) ;  Casco  Nat.  Bank  v.  Shaw,  79  Me. 
376  (10  A.  67);  Importers  &  Traders  Bank  v.  Shaw,  144  Mass.  421  (11 
N.  E.  666  ) 

360 


CH.  XII.]  NOTICE    OF    DISHONOR.  §    133 

notice  should  be  sent  within  the  usual  time  to  the  late  resi- 
dence of  the  deceased  drawer  or  indoiser,  addressed  to 
him,  or  to  his  '*  legal  representative,"  and  no  further  notice 
is  required  after  the  ai^pointmcnt  of  an  executor  or 
administrator.^  It  has  been  held  that  a  notice,  sent  under 
such  circumstances,  addressed  to  "the  estate"  of  the 
deceased  party,  w^ould  not  be  good,  although  there  does  not 
seem  to  be  any  satisfactory  reason  for  that  conclusion. ^ 
Nor  will  a  notice,  sent  before  the  qualification  of  the  per- 
sonal representative,  be  good  if  it  is  addressed  to  one  who 
is  expected  to,  and  does  subsequently,  qualify  as  such.^ 

If  a  personal  representative  has  qualified,  and  his  name 
and  address  are  known,  no  other  notice  but  one  sent  and 
addressed  to  him  will  be  sufficient  to  bind  the  estate  of  the 
deceased  drawer  or  indorser.* 

§  133.  The  time  allowed  for  giving  notice. —  The  notice 
should  always  be  given  after,  and  never  before,  the  bill  or 
note  has  been  dishonored.  And,  at  an  earlier  time,  the 
law  did  not  make  any  more  specific  requirement  than  that 
the  notice  should  be  given  -williin  a  reasonable  time  after 
dishonor.  It  is  now  the  rule  that  the  holder  has  until  the 
expiration  of  the  next  day  in  which  to  give  notice,  subject 
to  certain  modifications,  neces:?ary  in  the  cases  where  the 
notices  hav(i  to  be  sent  away  from  the  i)lacc  of  protest. 

1  GoodDOw  V.  Warren,  122  Mass.  79,  82  (23  Am.  Rep.  289);  Dodson  t>. 
Taylor,  5G  N.  J.  L.  11  (28  A.  316)  ;  Merchants'  Bk.  v.  Birch,  17  Johns.  25 
(8  Am.  Dec.  367);  Dcininger  v.  Miller,  40  N.  Y.  S.  195;  Weaver  v. 
Penn,  27  La.  Ann.  VI'.);  Pillow  v.  Hardeman,  3  Humph.  538  (39  Am.  Dec, 
!!t5);  Liiideman  t?.  Guldin,  34  Pa.  St.  54;  Drexler  c.  McGlynn,  99  Cal. 
143   (33  P.   773). 

-  Massachussets  Bank  v.  Oliver,  10  Cush.  557.  See  contra  Bk.  of 
Port  Jcrvis  v.  Darling,  91  Ilun,  236. 

3  Mathewson  v.  Strafford  Bk.,  45  N.  H.  104. 

■•  Goodnow  V.  Warren,  122  Mass.  79  (23  Am.  Rep.  289);  Sma'ley  v. 
Wright,  39  N.  J.  L.  (11  Vroom)  471;  Pillow  v.  Hardeman,  3  Humph.  538 
(39  Am.  Dec.  195);  Barnes  v.  Reynolds,  4  How  (Miss.)  114;  Maspero  r. 
Pedesclaux,  22  La.  Ann.  227.  Notice  to  one  of  two  or  more  personal 
representatives  will  be  sufficient.  Bealls  v.  Peck,  12  Barb.  245;  Louis- 
ana  S'.ate  Bankv.  Dumartrait,  4  La.  Ann.  483;  Carolina N.  B.  v.  Wallace, 
13  S.  C.  347  (36  Am.  Rep.  694). 

361 


§   133  NOTICE    OF    DISHOKOE.  [cil.  XII. 

If  the  drawer  or  indorser,  who  is  entitled  to  notice,  re- 
sides in  the  place  of  protest,  and  notice  should  be  sent  to 
his  residence,  it  may  be  delivered  at  his  residence  at  any 
time,  before  the  customary  hour  for  retirement,  on  the  day 
succeeding  the  dishonor  of  the  paper.  But  if  the  notice  is 
to  be  left  at  his  place  of  business,  it  should  be  served  dur- 
ing business  hours. ^  If  the  party  to  be  notified  resides  in 
some  other  place,  the  notice  may  be  sent  by  mail,  and  if 
there  be  more  than  one  mail,  the  last  mail  of  the  following 
day  will  be  early  enough.  If  there  be  but  one  mail,  it 
should  be  sent  by  that  mail,  unless  it  is  made  up  at  an  un- 
reasonable hour,  when  the  holder  may  dispatch  the  notice 
by  the  mail  of  the  second  succeeding  day.  What  is  a  rea- 
sonable hour  depends  upon  the  habits  of  the  community. ^ 

Each  indorser  has  the  same  time  after  the  receipt  of  the 
notice  of  dishonor,  in  which  to  notify  the  prior  parties 
whom  he  wishes  to  hold  liable.  Aud  if  one  party  fails  to 
issue  his  notice  on  the  day  following  his  receipt  of  the 
notice,  the  party  so  notified  will  be  discharged  of  all  lia- 
bility, even  though  the  excessive  diligence  of  the  holder  or 
later  indorser  has  enabled  the  indorser  notified  to  receive 
the  notice  within  the  usual  time  after  dishonor.^ 

1  Garnett  v.  Woodcock,  6  Maule  &  S.  44;  Cayuga  Co.  Bk.  v.  Hunt,  2 
Hill,  635;  Hallo  well  v.  Curry,  41  Pa.  St.  322;  Bonner  v.  City  of  New 
Orleans,  2  Woods,  135;  Adams  v.  Wright,  14  Wis.  442;  Marks  v.  Boone, 
24  Fla.  177  (4  So.  532). 

2  Martin  v.  Ingersoll,  8  Pick.  1;  Haskell  v.  Boardman,  8  Allen,  38;  U. 
S.  Bk.  V.  Barker,  12  Wheat.  559;  Bk.  of  Alexandria  v.  Swan,  9  Pet.  33; 
Smith  V.  Poillon,  87  N.  Y.  690  (^41  Am.  Rep.  402);  Nat.  Bk.  v.  Bradley, 
117  N.  C.  526  (23  S.  E.  455);  Stephenson  v.  Dickson,  24  Pa.  St.  148  (62 
Am.  Dec.  3C9)  ;  Marks  v.  Boone,  24  Fla.  177  (4  So.  IS2)  ;  West  v.  Brown, 
6  Ohio  St.  542;  Downs  v.  Planters'  Bk.,  1  Smed.  &  M.  2G1  (40  Am.  Dec. 
92);  Hartford  Bk.  v.  Stedman,  3  Conn.  489;  Chick  v.  Pillsbury,  24  Me. 
458  (41  Am.  Dec.  394).  If  there  is  no  mail  on  the  succeeding  day,  as 
might  be  the  case  in  foreign  mail  by  sea,  the  notice  must  be  sent  by  the 
next  regular  mail  ship.  Lenox  v.  Leverett,  10  Mass.  1  (6  Am.  Dec.  97) ; 
Stainback  v.  Bk.  of  Va.,  11  Gratt.  260. 

3  Shelburne  Falls  N.  B.  ■;;.  Townsley,  102  Mass.  177  (3  Am.  Rep.  446)  ; 
Bartlett  v.  Hawley,  120  Mass.  92;  West  River  Bank  v.  Taylor,  34  N.  Y. 
128;  Seaton  v.  Scoville,  18  Kans.  433  (26  Am.  Rep.  779);  Manchester 
Bk.  V.  Fellows,  28  N.  H.  302;  Etting  v.  Schuylkill  Bk.,  2  Pa.  St.  355  (44 

3G2 


CH.  XIT.]  NOTICE    OF    DISHONOR.  §    ^35 

If  the  succeeding  clay  is  a  legal  holida}',  the  notice  may, 
but  need  not,  be  sent  on  that  day  ;  it  may  be  dehiyed  until 
the  next  business  day  following.  And  it  has  been  held 
that,  if  an  indorser  receives  notice  on  a  legal  holiday,  since 
he  is  not  obliged  to  open  his  mail  on  such  a  day,  he  has 
until  the  second  day  after  the  holiday  in  which  to  send  out 
his  notices.^ 

§  134.   Manner  of  giving  notice,  when  important. —  If 

the  drawer  or  indorser,  who  is  to  be  notilied,  actually 
receives  the  notice  within  the  accustomed  and  required 
time,  it  is  of  no  consequence  how  it  was  transmitted  or 
communicated.  The  manner  of  giving  notice  becomes 
important  only  when  the  party  notified  did  not  receive  the 
notice  at  all,  or  it  did  not  reach  him  in  due  time."'^ 

§  135.  Manner  of  giving  notice,  where  parties  to  be 
notified  reside  in  the  same  place. —  Where  parties  to  be 
notified  reside  in  the  place  of  presentment,  it  is  now  gen- 
erally required  that  the  notice  t^hould  be  served  personally 
on  them  or  on  their  representatives,  whether  the  party 
notifying  resides  there  or  elsewhere.  Under  such  circum- 
stances, a  notice  sent  l)y  mail  is  insulBcient.^ 

Am.  Dec.  205) ;  Corbin  v.  Planters'  N.  Bk.,  87  Va.  661  (13  S.  E.  98) ;  Stix 
V.  Mathews,  63  Mo.  371;  Lawson  v.  Farmers'  Bk.,  10  Ohio  St.  206; 
Rosson  V.  Carroll,  90  Tenn.  90  (16  S.  W.  66). 

1  Wright  V.  Shawcross,  2  B.  &  Aid.  501;  Haynes  v.  Birk?,  3  Bos.  & 
P.  699;  Shepard  v.  Hall,  1  Conn.  329;  Martin  v.  lugersoll,  8  Pick.  1; 
Farmers'  Bank  of  Bridgeport  v.  Vail,  21  N.  Y.  485;  Sylvester  u.  Crohan, 
138  N.  Y.  494  (34  N.  E.  273);  Friend  v.  Williamson,  9  Gratt.  31;  Com- 
mercial Bank  v.  Barksdale,  36  Mo.  263;  Deblieux  v.  Bullard,  1  Rob.  66 
(36  Am.  Dec.  684). 

2  Bank  of  United  States  v.  Corcoran,  2  Pet.  121 ;  Shelburne  N.  Bank 
V.  Townsley,  102  Mass.  177  (3  Am.  Rep.  445);  Cayuga  Co.  Bk.  v.  Ben- 
nett, 5  Hill,  236;  Dicken  v.  Hall,  87  Pa.  St.  379;  Cornett  u.  Hafer,  43 
Kan.  60  (22  P.  1015);  Carolina  N.  Bk.  v.  Wallace,  13  S.  C.  347  (36  Am. 
Rep.  694);  Moreland's  Assignee  v.  Citizens'  N.  B.  (Ky.),  30  S.  W.  637; 
Gilchrist  u.  Donnell,  53  Mo.  591;  Hendershot  v.  Neb.  N.  Bk.,  25  Neb.  127 
(41  N.  W.  133). 

^  Williams  v.  Bank  of  U.  S.,  2  Pet.  96;  Bowling  v.  Harrison,  6  How. 
(Miss.)  248;  Pcabody  Ins.  Co.  v.  Wilson,  29  W.  Va.  528  (2  So.  888); 
Cabot  Bk.  v,  Warner,  10  Allen,  522;  Brown  v.  Bk.  of  Abingdon,  85  Va. 

363 


§   136  NOTICE    OF   DISHONOR.  [CH.  XII, 

But  this  rule,  which  was  once  a  universal  requirement, 
now  gives  way,  whenever  a  clearly  established  custom  for 
notices  to  be  sent  by  mail  is  proven.^  And,  wherever  the 
postal  authorities  provide  for  the  general  delivery  of  mail 
by  carriers  at  the  places  of  business  or  residences  of  the 
persons  to  whom  they  are  addressed,  it  is  generally  held 
that  the  mail  is  the  proper  medium  for  the  transmission  of 
notices  of  dishonor,  for  the  obvious  reason  that  delivery 
by  letter  carrier  is  just  as  much  a  personal  service  of  the 
notice,  as  if  it  had  been  delivered  by  a  special  messenger. 
This  ruling  has  been  confirmed  by  statute  in  some  of  the 
States.  But,  in  case  of  delivery  of  notices  by  mail  in  the 
same  place,  it  must  be  deposited  in  the  post  office,  early 
enough  to  be  delivered  on  the  day  on  which  the  party  was 
entitled  to  receive  notice. ^ 

§  13(5.  Personal    notice,     how    and  where     served. — 

Where  personal  notice  of  service  is  required,  whether  it  is 
delivered  by  a  special  messenger  or  by  a  letter  carrier,  the 
notice  must  be  sent  to  the  place  of  business  or  residence 
of  the  party  to  be  notified.  And  if  the  person  cannot  be 
found  at  one  place,  it  is  not  necessary  to  seek  him  at  the 
other,  in  order  to  deliver  the  notice  to  him  in  person. 
It  may  be  left  with  the  person  found  to  be  in  charge  of  the 
place  of  business  or  residence;  or  if  no  one  can  be  found, 
it  would  be  sufficient  to  shove  it  under  the  door,  or  to  put 

95  (7  S.  E.  357);  Isbell  y.  Lewis,  98  Ala.  550  (13  So.  335);  Vance  v.  Col- 
lin?, 6  Cal.  435;  Bank  of  Commerce  v.  Chambers,  14  Mo.  App.  152; 
Swayze  v.  Britton,  17  Kan,  G25;  Thompson  &  Walkup  Co.  v.  Appleby 
(Kan.  App.  '97),  48  P.  933. 

1  Bowling  V.  Harrison,  6  How.  (Miss.)  248;  Lime  Rock  Bank?;, 
Hewett,  52  Me.  51;  Chicopee  Bk.  v.  Eager,  9  Met.  583;  Grinraan  v. 
Walker,  9  Iowa,  426;  Carolina  N.  B.  v.  Wallace,  13  S.  C.  347  (36  Am. 
Rep.  694). 

2  Dobree  v.  Eastwood,  3  C.  &  P.  250;  Eagle  Bk.  v.  Hathaway,  5  Met. 
212;  Phelps  V.  Stocking,  21  Neb.  343;  32  N,  W,  217  (good,  if  received  the 
next  day);  Shoemaker  v.  Mechanics'  Bk.,  .59  Pa.  St.  79,  83  (98  Am.  Dec. 
315);  Brennan  v.  Vogt,  97  Ala.  047  (11  So.  893);  Walters  v.  Brown,  15 
Md.  295  (74  Am.  Dec.  5G6)  ;  Benedict  v.  Schmieg,  13  Wash.  476;  43  P. 
374  (street  address  inquired  in  such  cases) . 

364 


CH.  XII.  1  NOTICK    OF   DISHONOR.  §    13G 

it  in  the  keyhole,  or  on  a  desk  or  table. ^  But,  in  order 
that  a  notice  may  be  sufficient,  when  left  at  the  party's 
place  of  business,  it  must  be  his  permanent  and  general 
place  of  business,  and  not  some  temporary  place  of  resort 
for  the  transaction  of  some  special  or  particular  business, 
or  a  place  where  he  attends  only  to  business  of  a  non- 
financial  character.'^ 

If  he  has  two  permanent  places  of  business  in  the  same 
city,  the  notice  may  be  sent  to  either,  unless  it  is  known 
that  he  attends  to  all  his  banking  business  at  one  particular 
place. ^ 

And  where  one  resides  at  a  hotel  or  boarding  house, 
that  is  his  legal  residence.  But  if  the  notice  is  not  deliv- 
ered to  the  party  notified  in  person,  it  should  be  delivered 
to  a  clerk  or  the  proprietor,  or  left  in  the  room  occupied 
by  such  party ;  although  it  seems  that,  in  the  case  of  a 
private  boarding  house,  it  will  be  sufficient,  if  left  at  the 
house  with  any  person  of  yeais  of  discretion/ 

In  all  these  cases,  the  party  to  be  notified  should  first  be 
inquired  for,  before  a  delivery  to  any  one  else  will  consti- 
tute a  sufficient  notification.'' 

It  is  presumable  that  notice  of  dishonor  may  be  served 
by  telephone,  but  to  be  sufficient,  one  must  be  sure  that 
the  right  party  receives  the  communication.^ 

1  Bk.  of  Columbia  v.  Lawrence,  1  Pet.  578;  Hobbs  u.  Straine,  149 
Mass.  212  (21  N.  E.  3C5) ;  Van  Vechten  v.  Pruyn,  13  N.  Y.  540;  Novins 
V.  Bank  of  Lansiugburj^h,  10  Mich.  547;  Isbell  v.  Lewis,  98  Ala.  550 
(13  So.  335) ;  Grinman  v.  Walker,  9  Iowa,  426 ;  Sanderson  v.  Reinstadler, 
31  Mo.  483;  Fourth  N.  B.  v.  Altheimer,  91  Mo.  190  (3  S.  W.  858) ;  Stewart 
V.  Eden,  2  Caines,  121  (2  Am.  Dec.  222). 

2  Bk.  of  Columbia  v.  Lawrence,  1  Pet.  578;  Bank  of  United  States  v. 
Corcoran,  2  Pet.  121;  Lamkin  v.  Edgerly,  151  Mass.  348  (24  N.  E.  49); 
Kleinman  v.  Boernstcin,  32  Mo.  311;  People  v.  N.  R.  Bk.,  (i2  Hun,  484. 

3  Commercial  Bk.  of  Albany  v.  Strong,  28  Vt.  3U;  (07  Am.  Dec. 
714);  Pliillips  v.  Aldersoii,  5  Humph.  402. 

*  Bank  of  United  States  v.  Hatch,  G  Pet.  250;  McMurlric  v.  Jones,  3 
Wash.  C.  C.  200;  Howe  v.  Bradley,  19  Me.  31;  Bauk  of  West  Tennessee 
V.  Davis,  5  Heisk.  430;  Ashley  v.  Gunton,  15  Ark.  415;  Miles  v.  Hall,  12 
Smed.  &  M.  332.     See  Bailey  v.  Bank  of  Missouri,  17  Mo.  407. 

^  Ashley  v.  Gunton,  15  Ark.  415. 

6  Thompson  &  Walkup  Co.  v.  Appleby  (Kan.  App.  '97),  48  P.  933. 

3G5 


§   137  NOTICE    OF   DISHONOR.  [CH.  XII. 

§  137.  Manner  of  serving  notice  on  persons  residing 
elsewhere. — When  the  parties  to  be  notified  reside  else- 
where than  at  the  phice  of  presentment  or  protest,  or  the 
residence  of  the  party  notifying,  the  law  invariably  per- 
mits service  by  mail.  If  the  party  notifying  deposits  the 
notice  in  the  post  office,  properly  addressed  to  the  right 
party,  the  holder  or  other  party  sending  the  notice  has  done 
everything  required  of  him,  and  he  can  hold  the  party  so 
notified  liable  on  the  bill  or  note,  even  though  the  notice 
should  be  lost  in  the  mail.^  The  notice  will  in  such  a  case 
be  insufficient  if  it  can  be  proven  that  there  had  been  a  mis- 
take in  the  address,  due  to  the  negligence  of  the  party 
sending  the  notice.^ 

But  the  law  docs  not  absolutely  require  that  notices  be 
sent  by  mail  in  such  cases.  Other  means  of  communication 
may  be  resorted  to,  the  telephone,  the  telegraph,  or  a 
special  messenger.  But  where  such  unusual  means  of 
communication  are  employed,  to  hold  the  drawer  or  indor- 
ser  liable,  the  notice  must  be  delivered  within  the  time, 
that  it  would  have  been  delivered,  if  it  had  been  sent  by 
mail.^ 

If  the  party  to  be  notified  does  not  reside  in  the  same 
place  where  he  transacts  his  business,  it  would  seem 
proper  and  necessary  for  the  notice  to  be  mailed  to  him 
at  his  place  of  business,  unless  it  is  known  that  he  receives 

1  Lindenberger  v.  Beall,  6  Wheat.  104;  Shelburne  Falls  N.  B.  v. 
Townsley,  102  Mass.  177  (3  Am.  Rep.  445);  Swampscolt  Mach.  Co.  v. 
Rice,  159  Mass.  404  (34  N.  E.  520);  United  States  Nat.  Bank  t?.  Burton, 
58  Vt.  426;  Miller  v.  Hackley,  5  Johns.  375  (4  Am.  Dec.  372) ;  Wilson  v. 
Richards,  22  Minn.  337.  Deposit  in  a  street  letter-box  is  a  deposit  in 
the  post  office.  Casco  N.  Bk.  v.  Shaw,  79  Me.  376  (10  A.  67)  ;  Wood  v. 
Callaghan,  61  Mich.  402  (28  N.  W.  162);  Johnson  v.  Brown,  154  Mass.  105 
(27  N.  E.  994.)  See  contra,  Townsend  v.  Auld,  31  N.  Y.  S.  29;  10 
Misc.  343. 

2  Bacon  v.  Hanna,  137  N.  Y.  379  (33  N.  E.  303) ;  Sylvester  v.  Crohan, 
63  Hun,  509;  s.  c.  138  N.  Y.  494  (34  N.  E.  273) ;  Hart  v.  McLtllan,  80  Me. 
95  (13  A.  272). 

3  Bk.  of  Columbia  v.  Lawrence,  1  Pet.  578;  Van  Vechten  v.  Pruyn, 
13  N.  Y.  549;  Cassidy  v.  Creamer  (Pa.),  13  A.  744;  Dobree  v.  Eastwood, 
3  C.  &  P.  250;  Minehart  v.  Ilandlin,  37  Ark,  276;  Jarvis  v.  St.  Croix  Mfg. 
Co.,  23  Me.  287;  Drexler  v.  McGlynn,  99  Cal.  143  (33  P.  773). 

3(36 


CH.  XII.]  NOTICE    OF   DISHONOR.  §   137 

his  mail  at  his  residence  ;  or  unless  he  resides  in  the  place 
where  the  bill  or  note  is  payable,  and  to  be  presented  or 
protested.  In  these  latter  cases  the  notice  should  be  sent 
to  the  residence.^ 

If  there  is  no  i)ost  office  at  the  place,  where  the  party  to 
be  notified  has  his  residence,  or  transacts  his  business,  the 
notice  should  be  sent  to  the  nearest  post  office,  unless  it  is 
known  that  he  customarily  receives  his  mail  at  some  other 
office,  when  it  should  be  sent  to  him  there. ^ 

On  the  other  hand,  it  is  sufficient  to  address  a  notice 
generally  to  the  city  or  town,  in  which  the  party  resides  or 
transacts  his  business,  even  though  there  be  one  or  more 
branch  po>t  offices,  or  there  is  a  postal  delivery  ;  unless  it 
is  known,  that  the  party  is  in  the  habit  of  receiving  his 
mail  at  a  particular  branch  of  the  post-office,  or  what  his 
street  address  is.  If  these  facts  are  known,  the  party 
notifying  should  add  these  particulars  to  the  address,  in 
order  to  preserve  the  liability  of  the  drawer  or  indorser 
notified.'^ 

In  all  cases  of  transmission  of  notices  by  mail  in  the 
United  States,  the  name  of  the  State,  as  well  as  of  the 
town,  is  required.* 

Where  the  drawer  or  indorser  gives  a  particular  ad- 
dress,—  as  ho  has  a  right  to  do,  and  which  he  is  presumed 
to  have  done,  when  he  subscribes  an  address  to  his  signa- 
ture, —  to  which  notices  and  other  communications  should 
be  sent,  no   notice    will   he  sufficient   to  charge   him   with 

1  "Williams  v.  Banli  of  U.  S.,  2  Pet.  96;  Montgomery  Co.  Bank  v. 
Marsh,  7  N.  Y.  481;  Van  Vechtan  v.  Pruyn,  13  N.  Y.  549;  Webber  v. 
Gotthold,  28  N.  Y.  S.  703  (8  Misc.  50.^);  "Wolfe  v.  Jewett,  10  La.  383. 

2  Bk.  of  Columbia  v.  Lawrence,  1  Pt.  578;  Spaulding  v.  Krutz,  1  Dill, 
C.  C.  414;  Bank  of  Geneva  v.  Ilowlett,  4  Wend.  328;  Sanderson  v. 
Reinstadler,  31  Mo.  4811;  Jones  v.  Lewis,  8  Watts.  &  S.  14.  See  Citizens 
N.  Bk.  V.  Cade,  73  Mich.  449  (41  N.  W.  500). 

3  Saco  N.  B.  V.  Sanborn,  r,3  Me.  310  (18  Am.  Rep.  224) ;  True  v.  Collins, 
3  xVllen,  438;  Burlingame  v.  Foster,  128  Mass.  125;  Morse  v.  Chamberlain, 
144  Mass.  40G  (11  N.  E.  5G0) ;  Downer  v.  Reraer,  21  "Wend.  10;  s.  c.  23 
Wend.  f)20;  Am.  N.  B.  u.  Junk,  etc.,  Mfg.  Co.,  94  Tenn.  G24  (30  S. 
W.  753). 

<  Beckwith  v.  Smith,  22  Me.  125  (38  Am.  Dec.  290). 

367 


§   138  NOTICE    OF    DISHONOR.  [CH.   XII. 

liability  on  the  bill  or  note,  if  it  is  not  sent   to  the  given 
address.^ 

The  holder  has  a  right  to  presume  that  the  address  of  the 
drawer  or  indorser  has  not  been  changed  since  the  negotia- 
tion or  transfer  of  the  paper;  but  if  he  should  know  of 
such  a  change,  he  must  send  the  notice  to  the  new  address, 
and  a  notice  sent  under  such  circumstances  to  the  old  address 
will  not  be  sufficient. ^ 

§  138.  What  is  meant  by  "residing  in  the  same 
place." — The  importance  of  determining  whether  one 
resides  in  the  same  place,  arises  only  when  the  sufficiency 
of  a  notice  by  mail  is  inquired  into.  It  does  not  depend 
so  much  upon  the  fact  that  the  parties  reside  within  or  with- 
out the  corporate  limits  of  the  same  town,  as  whether  they 
get  their  mail  out  of  the  same  or  different  post-offices.  If 
the  parties  get  their  mail  out  of  different  branches  of  the 
post  office,  as  where  there  arc  branches  of  the  post  office  in 
the  same  corporate  city  or  town,  the  parties  are  held  for 
the  present  purposes  to  reside  in  different  places;  and  a 
notice  of  dishonor  sent  by  mail  will  preserve  the  contingent 
liability  of  the  drawer  or  indorser  so  notified.-^ 

But  if  the  parties  resort  to  the  same  post  office  for  their 
mail,  it  is  held  that  for  the  purpose  of  sendiug  notices  of 
dishonor  they  must  be  considered  as  residing  in  the  same 
place,  even  though  the  party  to  be  notified  resides  outside 
of  the  corporate  limits;  and  notice  must  be  served  person- 
ally,  unless  permitted  by  local  custom  or  statute.*     But 

1  Hodges  V.  Gait,  8  Pick.  2,51;  Bartlett  v.  Robinson,  39  N.  Y.  187; 
Dicken  v.  Hall,  87  Pa.  St.  379;  Paterson  Bank  v.  Butler,  7  Halst.  (H  N. 
J.  L.)  268;  Bk.  of  Columbia  v.  Magruder,  6  Har.  &  J.  172  (14  Am.  Dec. 
271);  Carter  v.  Union  Bk.,  7  Humph.  548  (46  Am.  Dec.  89);  Peters  v. 
Hobbs,  25  Ark.  67  (91  Am.  Dec.  526);  Tyson  v.  Oliver,  43  Ala.  455. 

2  Saco  N.  B.  V.  Sanborn,  63  Me.  340  (18  Am.  Rep.  224)  ;  Requa  v.  Col- 
lins, 51  N.  y.  144;  First  N.  B.  v.  Wood,  51  Vt.  473  (31  Am.  Rep.  692); 
Knott  V.  Venable.  42  Ala.  186;  Dunlap  v.  Thomson,  5  Yerg.  67;  Davis  r. 
Eppler,  38  Kan.  629  (16  P.  793). 

3  Shaylor  ?;.  Mix,4  Alleu,35l;Patonu.Lent,4  Duer, 231 ;  Gist  u.Lybrand, 
3  Ohio,  307  (17  Am.  Dec.  595);  Bell  v.  Hagerstown  Bk.,  7  Gill.  216. 

*  Shelburne  Falls  N.  B.  v.  Townsley,  102  Mass.  177  (3  Am.  Rep.  445); 

368 


CH.  XII.]  NOTICE    or    DISHONOR.  §   139 

still  the  authorities  are  not  uniform.  There  are  many  cases, 
which  hold  that  notice  by  mail  will  be  sufficient  where  the 
party  notified  lives  outside  of  the  corporate  limits  of  the 
place  of  presentment  and  protest,  if  there  is  no  local  post 
office  and  the  party  gets  his  mail  through  the  post  office  at 
such  place  of  protest.  It  seems  that  the  right  decision 
depends  upon  the  degree  of  inconvenience  in  the  employ- 
ment of  a  special  messenger  to  make  personal  service  of  the 
notice.^ 

§  139.  Form  and  requisites  of  the  notice  of  dis- 
honor.—  Mere  knowledge  of  dishonor  does  not  take  the 
place  of,  or  amount  to  notice.  Notice  consists  of  the 
communication  of  the  fact  of  dishonor  by  the  person  whose 
duty  it  is  to  give  notice.  Where,  therefore,  this  commu- 
nication has  not  been  made  by  the  proper  party  and  in  the 
proper  way,  as  has  been  explained  in  the  sections  of  this 
chapter,  the  drawer  or  indorser  is  discharged  from  all 
liability,  even  though  he  has  learned  in  some  other  way  of 
the  fact  of  dishonor  within  the  required  time.^ 

But  it  is  not  necessary  that  the  notice  be  written  ;  it  may 
be  verbal.  And  it  seems  that  the  notice,  when  verbal,  may 
be  of  the  most  informal  and  meager  character,  and  yet  be 
sufficient,  unless  the  party  notified  asks  for  a  more  explicit 
notice,  and  the  additional  information  is  refused.^ 

Wherever,  however,  the  notice  is  written,  since  the  party 

Ireland  v.  Kip,  10  Johus.  490;  s.  c.  11  Johns.  231;  Brown  r.  Bk.  of 
Abingdon,  85  Va.  95  (7  S.  E.  357) ;  Farmers',  etc.,  Bank  v.  Battle,  4 
Humph.  85;  Forbes  v.  Omaha  N.  B.,  10  Neb.  338  (G  N.  W.  393). 

J  Bank  of  Columbia  v.  Lawrence,  1  Pet.  578;  Bk.  of  U.  S.  v.  Norwood, 
1  Ilarr.  &  J.  423;  Timms  v.  Delisle,  5  Blachf.  447;  Barrett  v.  Evans,  28 
Mo.  331;  Newberry  v.  Trowbridge,  4  Mich.  391;  s.  c.  13  Midi.  2G3. 

2  Juniata  Bk.  v.  Hale,  IG  Serg.  &  R.  1&7  (IG  Am.  Dec.  558) ;  Burgh  v. 
Legge,  5  M.  &  W.  418;  Bk.  of  Old  Dominion  v.  McVeigh,  29  Gratt.  64G 
Lane  v.  Bank  of  West  Tcnnessei-,  9  Ileisk.  419. 

3  Gilberts.  Dennis,  3  Met.  496;  Metcalfe  v.  Richardson,  11  C.  B.  1011, 
Cuyler  v.  Stevens,  4  Wend.  5GG;  Hirschfelder  v.  Loccy  &c.  Mfg.  Co.,  17 
N.  Y.  S.  72G;  Glasgow  v.  Pratte,  8  Mo.  33G  (40  Am.  Dec.  142);  Martin  v 
Brown,  75  Ala.  4t2;  First  N.  Bk.  v.  Ryerson,  23  Iowa,  608;  Pierce  v 
Schaden,  55  Cal.  406.  See  Citizens  N.  Bk.  v.  Cade,  73  Mich.  449  (41  N.  W 
500). 

24  3r)H 


§   139  NOTICE    OF   DISHONOR.  [CH.  XII. 

notified  has  not  the  same  opportunity  to  ask  for  additional 
information,  as  when  the  notice  is  verbal  and  personal;  in 
order  that  the  written  notice  may  be  sufficient,  it  must 
contain  statements  of  every  fact,  which  is  necessary,  in 
order  to  prove  the  liability  of  the  party  notified  on  the 
dishonored  bill. 

1.  The  notice  must  contain  a  description  of  the  bill  or 
note  sufficient  to  enable  the  party  notified  to  identify  the 
paper,  which  has  been  dishonored.  The  description,  when 
properly  made,  should  give  the  date  of  the  paper;  should 
state  by  whom  executed,  payable  to  whom,  for  what 
amount,  when  due,  by  whom  indorsed,  and  in  the  case  of 
a  bill,  on  whom  it  is  drawn.  And  if  it  is  payable  at  a 
particular  place,  the  place  of  payment  should  be  set  forth. 
When  these  ordinary  elements  of  a  bill  or  note  are  accur- 
ately described  in  the  notice,  the  holder  or  other  party 
giving  the  notice  has  fully  complied  with  the  requirements 
of  the  law  ;  and  he  does  not  lose  his  remedy  against  a 
drawer  or  indorser,  because  the  description  corresponds  to 
and  includes  two  or  more  bills  or  notes,  having  other  unusual 
points  of  differentiation.^ 

But  ill  order  that  the  ]:)arty  notified  may  in  any  case  take 
advantage  of  any  defect  or  insufficiency  of  the  description, 
and  claim  for  that  reason  a  discharge  from  liability  on  a 
bill  or  note,  he  must  be  able  to  show  that  he  has  been 
actually  misled  by  the  omissions  or  misstatements  of  the 
notice. 2 

2.  The  notice  should  also  show  that  the  paper  has  been 

1  Mills  V.  Bk.  of  U.  S.,  11  Wheat.  431;  Legg  v.  Vmal,  165  Mass.  555 
(43  N.  E.  518);  Gill  v.  Palmer,  29  Conn.  54;  Ilodgts  v.  Schuler,  22  N.  Y. 
115;  Dodsou  v.  Taylor,  56  N.  J.  L.  11  (28  A.  31C) ;  Glicksman  v.  Earley, 
78  Wis.  223  (47  N.  W.  272") ;  Brown  v.  Jones,  125  Ind.  375  (25  N.  E.  452)  ; 
Klochenbaura  v.  Pierson,  16  Cal.  375;  Townsend  v.  Herr,  85  Mo.  5C3. 

-  Dennistoun  v.  Stewart,  17  How.  606;  Bank  of  Alexandria  v.  Swan,  0 
Pet.  33;  King  v.  Hurley,  85  Me.  525  (27  A.  463);  Smith  v.  Whiting,  12 
Mass.  6  (7  Am.  Dec.  25);  Youngs  v.  Lee,  12  N.  Y.  55;  Gates  v.  Beecher, 
60  N.  Y.  518  (19  Am.  Rep.  207) ;  Gill  v.  Palmer,  29  Conn.  54;  Rowland  v. 
Adrain,  29  N.  J.  L.  (I  Vroom)  41 ;  Tobey  v.  Lennig,  14  Pa.  St.  483;  Snow 
V.  Perkins,  2  Mich.  238;  Johnson  v.  Cocks,  7  Eng.  (Ark.)  672;  McCune  v. 
Belt,  38  Mo.  281. 

370 


en.  XII.]  NOTICE    OF    DISHONOR.  $   140 

dishonored,  ^.  e.,  that  it  has  been  presented  for  payment, 
payment  demanded,  and  refused.  All  these  facts  should 
be  stated,  in  order  to  show  a  case  of  dishonor.^ 

But  it  has  been  held  that,  if  the  notice  states  that  the  bill 
or  note  has  been  "  dishonored,"  or  *'  protested,"  no  fur- 
ther statement  is  required.^ 

3.  It  is  held  that  the  notice  should  also  contain  the  state- 
ment that  the  holder  or  other  party  giving  the  notice  looks 
for  payment  to  the  party  notified.-^  But  it  is  now  very 
generally  held  that  this  is  not  necessary,  inasmuch  as  the 
giving  of  notice  is  of  itself  sufficient  intimation  of  the  in- 
tentions in  this  respect  of  the  party  giving  the  notice.* 

It  has  been  held  that  there  will  be  sufficient  notification, 
if  copies  of  the  bill  or  note  and  of  the  protest  are  sent  to 
the  party  to  be  notified.^  On  the  other  hand,  it  has  been 
held  that  an  unsigned  notice  is  not  sufficient.^ 

§  140.  Allegation  and  proof  of  notice.  —  In  an  action 
on  a  bill  or  note  against  a  drawer  or  indorser,  the  burden 
is  on  the  plaintiff  to  prove  that  the  drawer  or  indorser  has 
been  <1uly  notified.  Whore  there  has  been  personal  service, 
the  fact  that  the  defendant  has  received  the  notice  can  in 
most  cases  be  proven  by  the  plaintiff.     And  so,  also,  is  it 

1  Musson  V.  Lake,  4  How.  2(32;  Clark  v  Eldridge,  13  Met.  9G;  Page  v, 
Gilbert,  60  Me.  485;  Salomon  v.  Pfeister,  &c.  Co.  (N.  J.  L.),  31  A.  G02. 
See  Wallace  v.  Crilley,  46  Wis.  577.  And  see  Cromer  v.  Piatt,  37  Mich. 
132  (26  Am.  Rep.  503),  where  the  rule  of  the  text  is  held  to  be  too  severe. 

2  Hartley  v.  Case,  4  B.  &  C.  339;  Mills  v.  Bk.  of  U.  S.,  11  Wheat.  431 ; 
Ilousatonic  Bk.  v.  Laflin,  5  Cush.  546;  Kilgore  v.  Buckley,  14  Conn.  362; 
Youngs  V.  Lee,  12  N.  Y.  55;  Stf'phenson  v.  Dickson,  24  Pa.  St.  148  (62 
Am.  Dec.  362)  ;  Burkam  v.  Trowbridge,  9  Mich.  209;  Reynolds  ?'.  Apple- 
man,  41  Md.  615;  Eastman  v.  Furman,  24  Cal.  379. 

3  See  Davis  ».  Burt,  7  Iowa,  56;  East  v.  Smith,  4  D.  &  L.  744;  Solarto 
V.  Palmer,  7  Bing.  530;  s.  c.  1  Bing.  N.  C.  194. 

*  Bk.  of  U.  S.  V.  Carneal,  2  Pet.  542;  Ch.ard  v.  Fox,  14  Q.  B.  200;  Bur- 
gess V.  Vreeland,  23  N.  J.  L,  (4  Zab.)  71  (59  Am.  Dec.  408);  Clark  v. 
Eldridg'',  13  Mot.  96;  Cowles  v.  Harts, 3Conn.  516;  Graham  r.  Sangston, 
1  Mil.  ."9;  Townsend  v.  Lorain  Bk.,  2  Ohio  St.  345;  Bk.  of  Capo  Fear  v. 
R.-awoll,  2  Hawks.  560. 

5  Nelson  V.  First  N.  B.,  C'.)  Fed.  798;    16  C.  C.  A.  425. 

«  Peoi.le's  N.  Bk.  r.  l)il)rell,  91  Tonn.  ;?01    (18  S.  W.  (\2C,). 

37] 


© 


ILL.   CAS.  NOTICE    OF    DISHONOR.  [CH.  XII. 

possible  for  him  to  prove  the  receipt  of  notice,  when  sent 
by  mail,  where  the  defendant  has  made  some  acknowledg- 
ment of  its  receipt.  But  in  the  case  of  transmission  of 
notices  by  mail,  it  is  not  necessary  for  the  plaintiff  to  prove 
the  actual  receipt  of  the  notice  by  the  defendant.  The 
plaintiff  makes  out  a  prima  facie  proof  of  the  receipt  of 
the  notice,  when  he  proves  that  a  notice  properly  addressed 
to  the  defendant  was  deposited  in  the  mail.  He  is  not 
required  to  establish  the  fact  that  the  notice  has  been 
received  by  the  defendant.^ 

But  where  the  indorser  or  drawer,  who  is  sued,  proves 
that  he  never  receives  the  notice,  it  is  sometimes  held  that 
evidence  in  support  of  the  allegation  of  due  notice  must 
be  more  certain  and  specific  as  to  the  fact  of  proper 
mailins.^ 


ILLUSTRATIVE   CASES. 


Lamkin  v.  Edgerly,  151  Mass.  348  (24  N.  E.  49). 
City  Nat.  Bank  of  Dayton  v.  Clinton  Co.  Nat.  Bank,  49  Ohio  St.   351  (30 

N.  E   958). 
Drexler  «.  McGlynn,  99  Cal.  143  f33  P.  773). 


What  Is  a  Sufficient  Address  in  Sending  Notice  of 
Dishonor? 

Lamkin  v.  Edgerly,  151  Mass.  348  (24  N.  E.  49). 

Exceptions  from  superior  court,  Suffolk  county ;  Robert  R. 
Bishop,  Judofe. 

An  action  by  Guy  Lamkin  against  C.  E.  Edgerly  and  Edward 
N.  Pickering  to  recover  on  a  promissory  note.  The  only  issue 
was  whether  defendant  Pickering,  the  first  indorser  on  the  note, 

i  Swampscott  Mach.  Co.  v.  Rice,  159  Mass.  404  (34  N.  E.  520);  Done- 
gan  V.  Wood,  49  Ala.  242  (20  Am.  Rep.  275)  ;  Gawtry  v.  Doanc,  51  N.  Y. 
84;  New  Haven  Co.Bk.  v.  Mitchell,  15  Conn.  206;  Marks  w.  Boone,  24  Fla. 
177  (4  So.  532);  Walker  v.  Stetson,  14  Ohio  St.  89  (84  Am.  Dec.  302); 
Martin  v.  Smith  (Mich.),  G6  N.  W.  61;  Tobey  v.  Berley,  26  111.  426. 
As  to  the  effect  of  statement  in  certificate  of  protest  of  service  of  notice, 
see  ante,  §  129. 

2  Townsend  v.  Auld,  31  N.  Y.  S.  19 ;  24  Civ.  Proc.  181 ;  Apple  v.  Lesser, 
93  Ga.  749  (21  S.  E.  171)  ;  Germ.  Secur.  Bk.  v.  McGarry,  106  Ala.  663  (17 
So.  704)  ;  Manchester  v.  Van  Brunt,  22  N.  Y.  S.  362. 

372 


CH.  XII   ]  NOTICE    OF    DISHONOR.  ILL.   CAS. 

received  due  notice  of  non-payment.  The  court  found  tliat  he 
did,  and  he  excepts  to  the  finding.  Pub.  St,  Mass.  c.  77,  §  16, 
provides  that  notice  of  non-payment  of  a  promissorry  note  may  be 
given  to  a  party  who  is  entitled  to  such  notice  by  depositing  in 
the  post  office  addressed  to  the  residence  or  "  place  of  business  " 
of  siicli  ])arty. 

Adams  &  Blinn,  for  plaintiff.  C.  S.  Lincoln  and  C.  P.  Lin- 
coln for  defendant  Pickering. 

Knowltox,  J.  If  the  room  to  which  the  notice  was  directed 
was  the  i)lace  of  business  of  the  defendant  Pickering  on  Novem- 
ber 8,  1888,  there  can  be  no  doubt  that  the  notice  was  sufficient. 
Pub.  St.  c.  77,  §  IG  ;  Hobbs  v.  Straine,  149  Mass.  212  ;  21  N.  E. 
Rep.  3G5;  Bank  v.  Faiibrother,  14S  Mass.  181;  19  N.  E.  Rep. 
345  ;  Bank  of  America  v.  Shaw,  142  Mass.  290  ;  N.  E.  Rep.  779  ; 
Importers'  &  Traders'  Nat.  Bank  o.  Shaw,  144  Mass.  421  ;  11  N. 
E.  Rep.  666.  The  judge  found  that  it  was  his  place  of  business, 
and  the  question  presented  by  the  bill  of  exceptions  is  whether 
there  was  evidence  to  warrant  the  finding.  The  room  was  at  No. 
68  Devonshire  street,  Boston  ;  and  at  that  time  the  defendant's 
name  was  on  the  door-post  at  the  street,  and  on  the  glass  panel  in 
the  door  of  the  room.  An  inquiry  for  him  of  a  person  iu  the 
room  was  answered  by  a  statement  that  he  was  not  in.  The 
superintendent  of  the  building  testified  that  he  was  a  tenant  there 
the  first  part  of  November,  1888,  and  had  been  for  a  year  or  two, 
and  that  he  remained  there  and  had  goods  there  until  the  12th  da}^ 
of  November  or  later,  and  paid  rent  for  his  office  up  to  that  date. 
The  janitor  of  the  building  gave  similar  testimony,  and  said  that 
he  saw  the  defendant  in  his  office  twice  in  November  of  that  year, 
and  that  his  mail  was  left  there,  as  usual,  up  to  the  loth  of  No- 
vember. Although  there  was  other  evidence  which  tended  to 
show  that  he  spent  but  little  time  there,  the  judge,  on  the  whole, 
was  warranted  in  finding  that  the  room  had  not  ceased  to  be  his 
place  of  business  when  the  notice  was  given,  on  November  8th. 
Exceptions  overruled. 


All  Tndorsers  N^eert  Not  be  Notified  of  Dishonor  —  Tjia- 
bility  of  Collecting-  Bunk  for  Failure  to  Send  Out 
Notices. 

City  Nat.  Bank  of  Dayton  v.  Clinton  Co.  Nat.  Bank,  49  Ohio  St.  Zr>l  (30 

N.  E.  958). 

(Syllabus  by  the  court.) 

Error  to  circuit  court,  Clinton  county. 

The  plaintiff  in  error,  the  City  National  Bank  of  Daj'ton,  on 
the  3d  day  of  December,  A.  D.  1888,  filed  in  the  court  of  com- 
mon pleas  of  Clinton  county  a  petition,  wherein,  after  averring 
the  corporate  character  of  the  plaintiff  and  defendant,  it  sets 
forth  as  the  grounds  for  the  relief  which  it  sought  against  the 
defendant   in  error,    the  Clinton  County  Bank,  that  in  the  due 

373 


ILL.  CAS.  NOTICE   OF   DISHONOR.  [ciI.  XII. 

course  of  its  business  it  purchased,  before  due,  of  S.  J.  Patter- 
son, the  payee  thereof,  a  certain  promissory  note,  which  was  pay- 
able at  the  banking  house  of  the  defendant  in  error ;  that  said  S. 
J.  Patterson  indorsed  the  same  ;  that  after  said  purchase,  and 
before  the  note  became  due,  tbe  plaintiff  in  error  forwarded  it  to 
the  defendant  in  error  for  collection ;  that  defendant  in  error 
undertook  to  collect  the  same,  or,  if  not  collected,  to  take  such 
steps  as  were  necessary  to  fix  the  liability  of  the  indorser ;  that 
the  note  was  not  paid  when  due  ;  that  the  defendant  in  error  did 
not  protest  the  same  so  as  to  fix  the  liability  of  the  indorser; 
that  the  makers  were  insolvent,  and  praying  damages  for  the 
amount  of  the  note  with  interest.  The  defendant  in  error 
answered  the  petition,  denying  that  the  note  was  purchased  by 
the  plaintiff  in  error  in  the  due  course  of  its  business,  but,  on 
the  contrary,  alleging  that  the  plaintiff  in  error  was  merely  the 
agent  of  the  indorser,  S.  J.  Patterson,  for  its  collection.  It  also 
set  up  as  a  defense:  "That  if,  in  fact,  said  plaintiff,  in  the  due 
course  of  its  business,  did  purchase  from  the  payee,  and  become, 
before  due,  the  owner  and  holder  of  said  note,  the  said  S.  J. 
Patterson,  as  an  indorser  thereof,  has  not  been  released  and  dis- 
charged from  his  liability  to  the  plaintiff  as  such  indorser  for  the 
following  reasons  of  fact:  "First.  This  defendant  duly  pre- 
sented to  and  made  demand  for  payment  of  said  rote  by  the 
makers,  Fulton  &  Peters,  of  all  which  said  p'aintiff  and  said 
indorser,  S.  J.  Patterson,  had  due  notice;  and  on  said  pnsenta- 
tion  and  demand  this  defendant  made  arrangement  for  llie  pay- 
ment of  said  note,  and  the  same  would  have  been  paid  but  for  the 
reasons  hereinafter  stated.  Second.  Said  S.  J.  Patterson,  after 
receiving  notice  that  said  note  had  been  duly  presented  to  said 
makers,  Fulton  &  Peters,  and  demand  of  payment  duly  made  by 
this  defendant,  assumed  to  and  did  extend  the  time  of  payment 
thereof  for  a  fixed  and  definite  time,  to  wit,  to  October  25,  1887. 
Said  indorser,  S.  J.  Patterson,  thereby  waived  formal  protest  and 
notice  by  a  notary  public,  all  of  wliich  said  plaintiff  then  well 
knew.  Third.  After  the  assignment  of  said  makers,  Fulton  & 
Peters,  the  said  indorser,  S.  J.  Patterson,  admitted  to  this 
defendant  his  liability  on  said  note,  and  made  no  claim  of  release 
by  reason  of  any  negligence  on  the  part  of  this  defendant  in  not 
formally  protesting  said  note  by  and  through  a  notaiy  public. 
This  defendant  denies  that  it  has  been  guilty  of  any  negligence 
whatever,  and,  on  the  contrary,  avers  that  it  used  due  dili- 
gence for  the  collection  of  said  note,  and  that  the  same  would 
iiave  been  collected  but  for  the  reasons  hereinbefore  stated." 
The  aflSimative  matters  of  the  answer  were  denied  by  the  reply. 
The  cause  was  tried  to  the  court  without  tlie  intervention  of  a 
jury,  and  a  judgment  rendered  for  the  defendant  in  error.  The 
evidence,  and  the  rulings  of  the  court  in  admitting  and  rejecting 
evidence,  were  embodied  in  a  bill  of  exceptions.  The  cause  was 
taken  to  the  circuit  court  by  the  plaintiff  in  error,  where  tlie  judg- 
ment of  tlie  court  of  common  pleas  was  affirmed,  whereupon  pro- 

374 


CH.  XII.]  NOTICK    OF    DISHONOR.  ILL.  CAS. 

ceedings  were  institute  1  in  this  court  to  obtain  u  reversal  of  both 
of  said  judgments.     Reversed. 

Guuckel  &  Rowe  and  Mills  &  Van  Pelt,  for  jJainliff  in  error. 
SniiLh  &  Savage,  for  defendant  in  error. 

BuADBL'UY,  J.  Tlieie  is  no  conflict  in  the  evidence  relating  to 
any  material  fact  in  this  case.  The  petition  avers  that  the 
plaintiff  in  error  had  purchased  the  note  which  is  the  sul)ject  of 
controversy  between  the  parties  hereto  in  due  course  of  business 
before  it  becmne  due.  This,  it  is  tiue,  the  answer  of  the  defend- 
ant in  error  denies,  but  tlie  cashier  of  tlie  plaintiff  in  eiror,  G. 
B.  Harman,  states  directly  and  unequivocally  in  his  deposition 
that  his  bank  purchased  the  paper  of  the  payee,  S.  J.  Patterson, 
on  August  20,  1888,  five  days  after  its  date,  at  a  discount  of  7 
per  cent.;  that  the  discount  amounted  to  $5.07 — -all  whicli 
he  says  is  shown  by  the  books  of  the  bank.  Mr.  Eichel- 
berger,  bookkeeper  for  Mr.  Patterson,  is  equally  explicit.  No 
attempt  is  made,  by  the  cross-examination  or  otherwise,  to  cast 
a  suspicion  upon  or  to  discredit  these  two  witnesses,  or  impeach 
the  correctness  of  the  books  of  the  bank;  nor  is  any  evidence 
adduced  that  in  the  slightest  degree  contradicts  their  statements. 
Under  these  circumstances,  it  cannot  be  presumed,  even  to  sup- 
port the  judgment  rendered,  that  the  court  of  common  pleas 
found  th  s  evidence  to  be  false,  and  totally  disregarded  it  in 
making  up  its  judgment. 

The  real  contention  between  the  parlies  w:is  whether  Patterson, 
the  indorser  of  the  promissor}'  note,  had  been  discharge  d  from 
liability  to  the  plaintiff  in  error  by  reason  of  the  negligence  of 
the  defendant  in  error.  The  note  had  been  transmitted  to  de- 
fendant in  error  for  collection,  and  was  not  paid  at  maturity.  If 
defendant  in  error,  by  its  negligence,  haddiscliargcd  the  indorser, 
then  it  should  be  held  liable  for  the  damages  it  thereby  caused  ; 
but  if,  notwithstanding  this  alleged  negligence,  Patterson  re- 
mained lialile,  it  should  be  exonerated,  for  all  the  duty  it  owed  to 
the  plaintiff  in  error  in  case  the  note  was  not  paid  was  to  take 
such  action  as  would  charge  the  indorser.  When  the  note  ma- 
tured, the  defendant  in  error  notified  the  makers,  and  one  of 
thi'm  came  to  its  banking  house.  A  plain  and  simple  duty  then 
confronted  the  defendant  in  error,— either  to  require  payment  of 
the  note,  or,  in  default  thereof,  to  take  such  action  as,  by  the  law 
merchant,  was  necessary  to  charge  the  indorser.  It  did  neither. 
That  the  note  was  conditionally  paid,  is  suggested.  What  that  may 
mean  in  this  connection  is  not  clear.  No  doubt  that,  as  between 
the  holder  and  the  maker  of  a  promissory  note,  a  conditional  pay- 
ment may  be  made  ;  but  the  rules  of  the  commercial  law  require 
a  holder,  who  intends  to  hold  an  indorser  liable,  to  give  notice  to 
the  latter  of  the  default  of  the  maker.  Anything  le>s  than  a  full 
and  alisolute  payment  is  a  default,  for  nothing  less  than  that 
measures  the  duty  of  the  maker.  In  this  case,  however,  there 
was  no  conditiomd  pa3'ment  made.  True,  the  defendant  in  error 
had  in  its  hands  the  means  of  enforcing  payment,  Vmt  did  nothing. 

375 


ILL.  CAS.  NOTICE    OF   DISHONOR.  [CH.  XII. 

It  simply   accepted  tbe  maker's  promise  that,  if  Patterson  did 
not  give  further  time,  they  would  pay  the  note.     If  the  defendant 
in  error  had  given  notice  to  the  plaintiff  in  error  of  the  default 
of   the  maker,  it  would  have  discharged  its  duty,  for  it  would 
have  afforded  the  latter  an  opportunity  to  give  uoiice  to  Patter- 
son.    Lawson   v.    Bank,   1  Ohio  St.  206.     It  is   true   that    the 
defendant  in  error  could  have  passed   by  the  plaintiff  in  error, 
and  given  notice  of  the  maker's  default  directly  to  the  indorser, 
Patterson,  and  thus  fixed  the  latter' s  liability.     This  the  defend- 
ant in  error  also  failed  to  do.     It  is  suggested  that  this  failure 
was  on  account  of  ignorance  of  the  residence  or  address  of  Pat- 
terson.    If  this  was  true,  it   constitutes  no  excuse  for  (1)  the 
defendant  in  error,  in  that   contingency,  not  being  able  to  dis- 
charge its  duty  in  any  other  way  than  by  a  notice  to  the  plaintiff 
in  error,    was  bound   the    more  strongly  to   notify   the  latter ; 
and  (2)  the  means  of  knowledge  were  at  hand.     Fulton,  one  of 
the  makers  of  the  note,  was  at  the  bank,  and  announced  his  in- 
tention to  write  to  Patterson  to  obtain  an  extension  of  the  time 
of  payment.     It  was  apparent  from  the  conversation  that  he  had 
with  the  officers  of  defendant  in  error  that  he  knew  Patterson's 
address,  and  an  inquiry  of   him  would  have  enlightened   those 
officers;  but  the  inquiry  was    not   made.     The   makers    of  the 
note,  Fulton  &  Peters,  in  fact  wrote  to  Patterson  for  an  exten- 
sion in  the  following  terms :   "  Wilmington,  O.,  October  19,  1887. 
Mr.  S.  J.  Patterson,  Dayton,  O. —  Dear  Sir:  We  wish  you  would 
advise  the  Clinton  County  Bank  to  hold  our  note  until  November 
5th,  or,  if  you  cannot  do  that,  anyhow  until  the  25th  inst.     We 
cannot  possibly  meet  it  until  at  least  that  time ;  and  obhge,  yours, 
Fulton  &  Peters."     This  is  the  only  notice  that  Patterson  received. 
Whether  a  notice  of  the  non-payment  of  a  promissory  note, 
given  by  the  maker  to  the  indorser,  is  sufficient  to  fix  the  liability 
of   the   latter,    has   not   been   determined   by   this   court.     The 
authorities  upon  the  question  are  in  conflict.     The  cases  of  John- 
son V.  Harth,  1  Bailey,  482 ;  Rosher  v.  Kieran,  4  Camp.  87;  and 
Chitty  on  Bills,  p.  495,  note  m,  with  some  other  authorities,  seem 
to  support  the  doctrine  of  the  sufliciency  of  such  notice,  while  the 
following  cases  deny  it:  Stanton   v.  Blossom,    14    Mass.    116; 
Tindal  v.  Brown,  1  Term  R.    167,  per  Willes'  opinion,  169,  and 
Buller,  J.,   170;  Stewart  v.  Kennett,  2  Camp.  177.     Nor  is  the 
determination    of    this    question    necessary     now,     for,     if     a 
notice  given  by  the  maker  to  an  indorser  should  be  held  sufficient 
to  charge  the   latter,  yet   this   letter  of   the   maker  is  faulty  in 
that   it  neither   states   that  any  demand  of   payment   had    been 
made,  that  the  note  had  been  forwarded  to  and  was  at  the  place 
of  payment,  or  that  it  was  due.     If   the  court  should  go  to  the 
extent  of   holding  that   the  indorser   is  bound    to   carry  in  his 
memory  the  due  date  of  a  note  that  he  indorses,  and  must  pre- 
sume that  its  payment  has  been  demanded  at  the  proper  time  and 
place,  all  which  is  necessary  to  make  this  letter  sufficient  notice, 
was  due  diligence  shown  in  giving  the  notice?     The  last  day  of 

376 


CH.  XII.]  NOTICE    OF    DISHONOR.  ILL.   CAS. 

grace  was  October  17th,  and  the  letter  was  not  written  until  the 
19th,  two  clays  later.  To  constitute  due  diligence  it  should  have 
been  deposited  in  the  post  office  in  time  to  have  departed  in  the 
earliest  mail  to  the  residence  of  Patterson  that  departed  after 
business  hours  on  the  18th.  Lawson  v.  Bank,  1  Ohio  St.  206. 
It  is  true  that,  if  the  defendant  in  error  had  chosen  to  give 
notice  of  nonpayment  to  the  plaintiff  in  error,  the  plaintiff  in 
error  would  have  had  one  day  after  it  received  notice  within 
which  to  give  notice  to  Patterson,  and  in  that  case  a  notice  given 
to  the  plaintiff  in  error  to  Patterson  on  the  19th  of  October  would 
have  been  in  time.  1  Pars.  Notes  &  B.  613;  Lawson  v.  Bank, 
1  Ohio  St.  206.  Where,  however,  a  holder  of  a  promissory  note 
passes  by  an  immediate  indorser,  and  serves  notice  of  nonpay- 
ment upon  one  more  remote,  he  cannot  avail  himself  of  the  time 
the  immediate  indorser  would  have  had  to  serve  the  remote  one, 
if  the  holder  had  given  notice  to  the  former,  but  the  holder  in 
that  case  must  give  notice  to  the  remote  indorser  within  the 
same  time  that  he  is  required  to  give  it  to  the  immediate  indorser. 
1  Pars.  Notes  &  B.  514 ;  Dobree  v.  Eastwood,  8  Car.  &  P.  250 ; 
Simpson  v.  Turnev,  5  Humph.  419;  Rowe  ^?.  Tipper,  13  C.  B. 
249;  Marsh  v.  Maxwell,  2  Camp.  210,  note.  Therefore,  if  the 
letter  of  Fulton  &  Peters  had  been  sufficient  in  form  and  sub- 
stance to  fix  the  liability  of  Patterson,  it  was  mailed  too  late,  and 
for  tliat  reason  he  was  discharged. 

This  release  of  Patterson  was  an  accomplished  fact  before  the 
makers  of  the  note  applied  to  him  to  extend  the  time  of  payment. 
The  omission  of  the  bank  to  require  payment,  or,  in  default 
thereof,  to  give  the  necessary  notice  to  charge  Patterson,  was 
caused  by  the  solicitations  of  the  makers,  Fulton  &  Peters.  The 
most  careful  scrutiny  of  the  records  fails  to  disclose  that  Patter- 
son, up  to  this  time,  said  or  did  anything  to  mislead  the  bank,  or 
to  induce  it  to  relax  its  vigilance,  or  to  omit  any  step  necessary 
in  law  to  charge  him  as  indorser.  Patterson  therefore  had  a  per- 
fect defense  against  any  action  to  charge  him  as  an  indorser, 
unless,  by  his  subsequent  conduct,  he  has  forfeited  his  right  to 
set  up  tills  discharge.  A  subsequent  promise  to  pay,  when  made 
with  full  knowledge  of  the  facts,  has  been  held  to  be 
evidence  of  a  demand  and  notice,  or  to  imply  a  previous 
waiver  thereof.  Myers  v.  Standart,  11  Ohio  St.  29;  Hib- 
hard  v.  Russell,  16  N.  H.  410;  Robbins  v.  Pinckard,  5 
Sniedes  &  M.  51  ;  Lewis  v.  Brehme,  33  Md.  412;  McPhetres  v. 
Halley's  Ex'r,  32  Me.  72;  Mense  v.  Osbern,  5  Mo.  544;  Loose 
V  Loose,  36  Pa.  St.  538;  Killby  v.  Rochussen,  18  C.  B.  (n.  c.) 
357.  In  the  case  under  consideration,  however,  no  promise  to 
pay  was  made  by  Patterson,  unless  the  following  letter,  written 
by  him  to  Fulton  &  Peters  in  reply  to  theirs  of  the  19ih  of  Octo- 
ber, asking  for  an  extension  of  tlie  time  of  payment,  can  be  con- 
strued into  such  promise:  "Dayton,  O.,  October  20,  1887. 
Messrs.  Fulton  «&  Peters,  Wilmington,  Ohio  —  Gentlemen: 
"  Yours  of  19th  at  hand,  and  we  have  instructed  our  bank  (to 

377 


ILL.  CAS.  NOTICE    OF    DISHONOR.  [CH.  XII. 

whom  the  note  belongs,  we  having  discounted  same)  to  grant 
extension  to  October  25th.  Please  honor  it  at  that  time,  and 
much  oblige,  yours  truly,  S.  J.  Patterson."  If  this  letter  should 
be  construed  to  contain  an  implied  promise  to  pay  the  note,  yet, 
as  it  was  written  without  any  knowledge  on  the  part  of  the  writer 
that  he  had  been  discharged  from  liability,  it  does  not  fall  within 
the  principles  upon  which  a  subsequent  promise  to  pay  has  been 
held  to  bind  an  indorser.     Tebbetts  v.  Dowd,  23  Wend.  379. 

Is  Patterson  estopped  to  set  up  his  discharge  by  reason 
of  his  letter  of  the  20th  of  October,  1888,  granting  an 
extension  to  the  makers  of  the  note?  On  October  17,  1888, 
tlie  day  the  note  matured,  one  of  the  makers,  Fulton,  was 
called  into  the  bank  and  his  attention  directed  to  it.  The 
makers  then  had  funds  in  the  bank  which  could  have  been 
applied  to  its  payment,  but  upon  Mr.  Fulton's  representation 
that  his  firm  was  pressed  for  means  it  was  induced  to  indulge 
them  until  they  could  apply  to  Patterson  for  a  short  extension  of 
the  time  of  payment,  promising  to  pay  it  if  Patterson  refused  to 
extend  the  time.  After  two  days'  delay  they  wrote  the  letter  of 
October  19th,  to  which  they  received,  in  answer,  Patterson's  let- 
ter of  the  20th,  granting  the  favor,  of  which  the  bank  was  at  once 
advised.  It  thereupon  continued  to  receive  and  ))ay  out  for  the 
makers  larcre  sums  of  money,  until  November  1,  1888,  on  which 
day  the  makers  assigned  their  property  in  trust  for  their  creditors, 
having  assets  sufficient  to  pay  only  a  few  cents  on  the  dollar  of 
their  indebtedness.  No  doubt,  but  for  this  letter  of  Patterson's, 
the  bank  would  have  charged  this  note  against  the  makers'  de- 
posits, and  in  that  way  secured  its  payment.  If  Patterson  had 
Ijeen  informed  of  these  facts,  and  chose  to  grant  an  extension  to 
the  makers,  and  the  bank,  relying  thereon,  had  paid  out  all  the 
funds  of  the  makeis  before  the  assignment  was  made,  and  thus 
lost  its  means  of  indemnity,  he  should  be  held  to  abide  the  conse- 
quences. But  he  had  no  such  knowledge.  He  neither  knew  that 
he  had  been  discharged  by  the  bank's  neglect,  nor  that  the 
bank  had  indemnity  within  its  control.  His  granting  the  exten- 
sion was  an  innocent  act  in  itself,  and  he  should  not  be 
charged  with  consequences  that  he  had  no  reason  to  suspect 
would  flow  from  it.  On  the  contrary,  the  bank,  defendant 
in  error,  was  an  actor  in  the  entire  transaction.  With  means 
of  payment  in  its  hands,  it  cho?e  to  indulge  the  makers  in 
direct  violation  of  its  duty  to  the  plaintiff  in  error.  It  knew  this 
indulgence  was  granted  to  the  makers  of  the  note  expressly  to 
enable  them  to  apply  for  an  extension  of  payment  to  one  who, 
upon  the  face  of  the  paper,  was  only  liable  in  case  it  did  the  very 
duty  that  it  must  of  necessity  violate  to  grant  the  indulgence; 
and  when  the  letter  from  Patterson  was  made  known  to  it,  and  it 
proceeded  to  act  upon  the  extension  granted,  it  had  no  reason  to 
believe  that  he  had  granted  the  estension  with  knowledge  of  the 
facts,  and  it  took  no  action  to  advise  liim  of  their  existence. 
Under  these  circumstances,  the  defendant  in  error  must  be  held 

378 


CH.  XII.]  NOTICE    OF    DISHONOR.  ILL.   CAS. 

to  have  assumed  the  risks  that  naturally  flowed  from  its  actions, 
one  of  wbieh  was  that  Patterson  might  avail  himself  of  a  defense 
lhu3  afforded  to  him  by  its  own  negligence.  As  upon  the  undis- 
puted facts  the  judgment  sbouM  have  been  for  tlie  plaintiff  in 
error,  it  becomes  unnecessary  to  consider  the  other  questions  that 
arise  upon  the  record. 

Judgment  reversed,  and  cause  remanded  for  further  proceed- 
ings. 


Notice  of  Dishonor  3Iust  be  Addressed  to  Executor  or 
Administrator  of  Deceased  Indorser. 

Drexler  v.  McGlynn,  90  Cal.  143  (33  P.  773). 

Patterson,  J-.  Tliis  is  an  action  against  the  defendants,  as 
executors  of  the  last  will  and  testament  of  James  M.  Donahue, 
deceased,  upon  a  promissory  note  indorsed  by  their  testator 
September  10,  1889.  The  note  became  due  March  10,  1890. 
Donahue  died  on  the  3d  day  of  Marcli,  1890,  leaving  a  will  in 
which  the  defendants  were  named  as  executors,  and  which  was 
filed  in  the  superior  court  on  the  11th  day  of  March,  1890. 

It  is  claimed  that  the  estate  is  not  liable  because  no  proper 
notice  of  protest  was  given,  but  we  think  the  i)oint  is  not  well 
taken.  The  notice  was  addressed  to  "Messrs.  Peter  J.  McGlynn 
and  J.  F.  Burgin,  Jr.,  a'lministrators  of  the  estate  of  J.  M. 
Donahue,  deceased,"  and  it  was  deposited  in  the  post  office  on 
the  day  the  note  became  due.  The  Civil  Court  provides  that  a 
notice  of  dishonor  may  be  given,  in  case  of  the  death  of  the 
parly  otherwise  euliiled  to  notice,  to  one  of  his  peisonal  repre- 
sentatives, or,  if  there  are  none,  then  to  any  nn  mber  of  his 
family,  and,  if  there  be  no  family,  it  must  l)e  nniilcd  to  his  last 
place  of  residence.  Section  3145.  Api)ellants  contend  that,  in- 
asmuch as  the  defendants  had  not  been  api)ointed  by  the  court 
at  the  time  the  notice  was  given,  they  were  not  personal  re[)re- 
senttilives,  within  the  mtaning  of  this  statute;  and  cases  are 
cited,  holding  that  notice  sent  to  a  person  afterwards  appointed 
administrator  of  an  intestate  is  insufficient.  The^e  authorities 
are  not  in  point.  While  it  is  true  that  the  apixfintment  of  an 
executor  is  only  provisional,  and  requires  the  approval  of  the 
court,  for  the  purpose  of  administraliD.i  upon  the  estate  of  the 
testator,  it  is  also  true  that  the  law  allows  a  man  to  ap[)oint  his 
executors,  subject  to  this  apjHOval,  and  treats  them  as  entitled 
to  the  office  until  they  renounce  it;  and  unless,  for  snme  reason, 
they  are  incomi)etent,  the  a[)pointment  makes  them  representatives 
of  the  estate,  "■  so  far  as  relates  to  acts  in  which  tluy  are  merely 
passive,  such  as  receiving  notice  of  the  di-honor  of  a  note  " 
Sboenberger's  Ex'rs  v.  Savings  Inst.,  28  Pa.  St.  4G6.  It  mat- 
ters not  that  the  person  named  in  the  will  may  never  be  actually 
appointed  executor  by  the  court.  He  may  renounce  the  trust. 
But,   as  he  is   the  person  to  whom  the  testator  has  confided  the 

379 


ILL.  CAS.  NOTICE    OF    DISHONOR.  [CH.  Xir. 

administration  of  his  estate,  it  is  regarded  as  safe  to  intrust  him 
wilh  the  notice.  "It  is  not  to  he  expected  that  any  person  can 
ordinarily  be  found  upon  whom  this  duty  [protecting  the  estate] 
will  rest  more  strongly  than  upon  one  who  is  named  as  executor 
in  the  will."  Goodnow  v.  Warren,  122  Mass.  82  ;  3  Rand.  Com. 
Paper,  §  1245.  The  reason  for  holding  that  a  notice  to  one 
named  in  the  will  as  executor  is  good,  is  not  applicable  to  the 
case  of  one  who  happens  after  the  notice  is  given  to  be  appointed 
administrator,  because  the  latter  is  neither  honorably,  nor  in 
legal  duty,  bound  to  do  anything  for  the  protection  of  the  estate. 

It  is  claimed,  also,  that  the  note  was  not  presented  for  pay- 
ment by  the  holder ;  that  the  evidence  shows  that  the  note  was 
transferred  to  the  Auglo-Californian  Bank,  which  was  the  holder 
of  the  note  at  the  time  demand  was  made.  The  certificate  of 
the  notary,  it  is  true,  states  the  note  was  presented,  and  payment 
was  demanded,  "at  the  request  of  the  Anglo-Californian  Bank, 
Ld.,  holder  of  the  original  note,"  but  the  plaintiff  testified  that 
he  had  been  the  owner  of  the  note  from  the  time  it  was  made 
until  the  day  of  his  trial,  and  the  fair  import  of  the  evidence  is 
that  the  note  was  given  to  the  bank  simply  for  collection.  Tlie 
notice  may  properly  be  given  by  an  agent,  and  the  agent  may 
give  the  notice  in  his  own  name.  3  Rand.  Com.  Paper,  §§  123G, 
1237;  2  Daniel  Neg.  Inst.,  §  991. 

There  is  nothing  in  the  point  that  the  notice  was  invalid  because 
it  was  addressed  to  the  defendants  as  "  administrator."  The 
notice  need  not  have  been  addressed  to  them  in  their  representa- 
tive character  at  all.  The  actual  receipt  of  the  notice  is  the 
material  thing.  Beals  v.  Peck,  12  Barb.  245.  If  the  defend- 
ants actually  received  the  notice, —  and  such  is  the  presumption 
from  the  fact  of  mailing,  properly  addressed  and  postage  pre- 
paid, —  the  object  of  the  law  has  been  attained. 

We  think  the  court  properly  overruled  the  demurrer.  The 
allegation  as  to  protest  might  have  been  more  specific  in  its 
statement  of  facts,  but,  as  against  a  general  demurrer,  it  is  good. 
Judgment  and  order  affirmed. 

We  concur:  Harrison,  J.  ;  Garoutte,  J. 

380 


CHAPTER    XIII. 

EXCUSES  FOR  FAILURE  OF  PRESENTMENT,  PROTEST  AND 

NOTICE. 

Section  141.  "War,  political  and  social  disturbances,  pestilence,  epidem- 
ics, conflagrations,  floods,  etc. 

142.  Drawing  with  no  right  to  expect  acceptance  or  payment. 

143.  Void  note. 

144.  Ignorance  of  and  failure  to  discover  the  address  of  par- 

ties. 

145.  Sickness,  death  or  accident  to  holder  or  to  paper. 

146.  Possession  of  security  by  drawer  or  indorser. 

147.  Waiver  of  presentment,  protest  and  notice. 

148.  No  damage  to  holder  —  Loss  or  destruction  of  the  instru- 

ment. 

§  141.  War,  political  and  social  disturbances,  pesti- 
lence, epidemics,  conflagrations,  floods,  etc. — Notwith- 
standing the  fact,  that  in  the  law  of  Commercial  Paper  the 
requirement  of  presentment,  protest  and  notice  is  vigorously 
enforced;  still  impossibilities  are  not  required.  When  cir- 
cumstances make  it  an  impossibility  for  the  holder  of  a  bill 
or  note  to  make  presentment  and  protest,  and  to  send  out 
notices  of  dishonor,  or  to  do  either  of  these  things,  at  the 
required  time  ;  he  will  be  excused  for  the  delay  or  non-per- 
formance of  these  conditions,  and  nevertheless  hold  the 
drawer  and  indorsers  liable. 

A  variety  of  occurrences  of  a  public  character  may  be 
mentioned  as  illustration,  which  so  block  the  wheels  of 
commerce,  that  it  l)ecoraes  impossible  to  perform  these 
commercial  duties.  Thus,  the  breaking  out  of  war  between 
the  countries,  in  which  the  parties  to  a  bill  or  note  reside, 
is  a  good  excuse,  as  long  as  hostilities  continue,  for  want 
of  presentment,  protest  or  notice,  because  all  intercour.«e 
between  the  citizens  of  belligerent  nations  is  then  strictly 
interdicted  by  the  law  of  war.' 

1  Scholefleld  v.  Eichelberger,  7  Pet.  586;  Ray  o.  Smith,  17  Wall.  411; 
Hubbard  v.  Matthews,  54  N.  Y.  43  (13  Am.  Rep.  562);  Hoase  v.  Adams, 
48    Pa.    St.  261   (86  Am.  Dec.  588);  Bynum  v.  Apperson,  9  Ilelsk.  632; 

381 


§    142  EXCUSES    FOR    NON-PRESENTMENT,  ETC.       [CH.  XIII. 

The  parties  to  commercial  paper  will  also  be  excused 
from  performing  these  conditions,  if  a  riot  or  other  public 
disturbance  forces  a  comi)lete  cessation  of  l)usiness  on  the 
day  of  maturity  of  a  bill  or  note.^  Want  of  presentment, 
piotest  and  notice,  or  either  of  them,  is  excused  also, 
where  business  is  completely  suspended  on  account  of  the 
prevalence  of  an  epidemic  or  other  disease,  by  the  occur- 
rence of  a  flood  or  conflagration.  But  in  all  these  cases, 
the  suspension  of  business  must  be  complete  and  made 
ab'«olutely  necessary  by  the  public  calamity  or  disturbance. ^ 

But  whenever  the  impediment  to  the  performance  of 
these  duties  is  removed,  it  is  the  duty  of  the  holder  to  make 
presentment  and  protest,  and  to  issue  notices  of  dishonor,  in 
order  to  preserve  the  liability  of  drawer  and  indorsers.  He 
has  a  reasonable  time  after  the  removal  of  the  cause  of 
delay,  in  which  to  do  these  things.^ 

§  142.  Dravi^ing  with  no  right  to  expect  acceptance  or 
payment. —  If  one  draws  on  another,  without  having  any 
reasonable  ground  to  expect  that  the  bill  will  be  honored, 
the  drawer  cannot    require   presentment  and  notice.* 

Farmer's  Bk.  v.  Gunnell,  26  Gratt.  131 ;  McVeigh  v.  Bk.  of  Old  Dominion, 
26  Gratt.  785;  Norris  v.  Despard,  38  Md.  487;  Peters  v.  Hobbs,  25  Ark. 
67;  Durden  v.  Smith,  44  Miss.  549.  And  the  same  rule  is  followed,  where 
a  part  of  the  country  is  occupied  by  the  military  forces  of  the  enemy, 
preventing  communication  between  parties  residing  in  the  different  sec- 
tions of  the  same  country.  Apperson  ■;;.  Bynum,  5  Coldw.  341;  Polk  v. 
Spinks,  5  Cold.  431  (98  Am.  Dec.  426). 

1  See  Apperson  v.  Union  Bk.,  4  Cold.  446;  Patience  v.  Townley,  2 
Smith,  223;  Purcell  v.  AUemong,  12  Gratt.  739. 

2  Tunno  v.  Lague,  2  Johns.  1  (1  Am.  Dec.  14). 

3  See  cases  cited  in  preceding  notes  and  Bond  v.  Moore,  93  U.  S.  593; 
House  V.  Adams,  48  Pa.  St.  261  (86  Am.  Dec.  588);  Gilroy  v.  Brinkley, 
12  Heisk.  392;  Labadiole  v.  Landry,  20  La.  Ann.  149. 

*  Lawrence  v.  Hammond,  4  App.  Dec,  (D.  C.)  467;  Kinsley  v.  Robin- 
son, 21  Pick.  327;  Thompson  v.  Stewart,  3  Conn.  171  (8  Am.  Dec.  168); 
Dollfus  V.  Frosch,  5  Hill,  493  (40  Am.  Dec.  368);  Kimball  v.  Bryan,  56 
Iowa,  632  (10  N.  W.  218);  Adams  v.  Darby,  28  Mo.  162  (75  Am.  Dec. 
115);  Brower  v.  Ruppert,  24  111.  182;  Cashman  v.  Harrison,  90  Cal.  297 
(27  P.  283)  ;  Avent  v.  Maroney  (Miss.),  12  So.  209;  Manning  v.  Maroney, 
87  Ala.  663;  6  So.  343  (where  the  drawer  had  instructed  drawee  not  to 
accept).  But  see  Cruger  v.  Armstrong,  3  Johns.  5  (2  Am.  Dec.  126). 
382 


CH.  XIII.]       EXCUSES    FOR   NON-PRESENTMENT,  ETC.  §   142 

But  this  fact  would  only  excuse  want  of  presentraeut, 
protest  and  notice  as  to  the  drawer  ;  the  indorsers  would 
nevertheless  he  discharged,  if  these  duties  to  secondary 
ohiigors  were  neglected  or  delayed,  unless  the  indorsers 
knew  when  they  indorsed  the  paper,  that  the  drawer's 
relations  with  the  drawee  did  not  justify  the  expectation 
that  the  bill  would  be  accepted.  In  the  latter  case,  the 
indorsers  as  well  as  the  drawers  would  be  held  bound  on 
their  indorsement,  notwithstanding  the  want  of  present- 
ment, protest  and  notice.^ 

But  the  mere  fact,  that  the  drawee  is  not  at  the  time 
absolutely  indebted  to  the  drawer,  is  no  ground  for  hold- 
ing that  the  drawer  had  no  right  to  expect  acec[)tance  of  his 
bill.  In  each  case  it  is  a  question  of  fact,  whether  in  view 
of  the  business  relations  of  the  drawer  and  drawee  an 
acceptance  of  the  bill  could  be  reasonably  expected.^ 

It  would  seem  that  if  the  drawee  has  accepted  the  bill, 
the  drawer  had  a  right  to  expect  him  to  pay  it,  when  it  is 
presented.  But  it  has  been  held,  that  even  in  that  case, 
the  relations  of  the  drawer  and  drawee  may  be  such  that 
the  former  has  no  reasonable  grounds  for  expecting  pay- 
ment, as  in  the  case  of  accommodation  acceptances  ;  and 
hence  he  may  be  held  liable  although  the  holder  fails  to 
make  presentment  for  payment,  or  to  send  the  drawer 
notice  of  dishonor.^     And,  for   the  same   reason,  the  in- 

J  French  v.  Bk.  of  Columbia,  4  Cranch,  141;  Mohawk  Bank  v.  Broder- 
ick,  10  Wend.  304;  s.  c.  13  Wend.  133  (27  Am.  Dec.  192);  Scarborough 
V.  Harris,  1  Bay,  177  (1  Am.  Dec.  609);  Ayarden  v.  Tucker,  7  Mass.  449 
(5  Am.  Dec.  62);  Bogy  v.  Keil,  1  Mo.  743. 

2  Dickens  v.  Beal,  10  Pet.  572;  Kuickerboker  L.  Ins.  Co.  v.  Pendleton, 
112  U.  S.  696;  Stanton  v.  Blossom,  14  Mass.  116  (7  Am.  Dec.  198);  Rob- 
inson V.  Ames,  20  Johns.  146  (11  Am.  Dec.  259);  Orear  r.  McDonald,  9 
Gill.  350  (53  Am.  Dec.  7f3);  Schuchardt  v.  Hall,  36  Md.  600  (11  Am.  Rep. 
514);  Adams  v.  Darby,  28  Mo.  162  (75  Am.  Dec.  115);  Welch  v.  Taylor 
Mfg.  Co.,  82  111.  579;  Miser  v.  Trovinger,  7  Ohio  St.  281;  Compton  v. 
Biair,  46  Mich.  1;  Leonard  v.  Olson  (Iowa,  '90),  08  N.  W.  677. 

3  Kinsley  v.  Robinson,  21  Pick.  327;  Barbaroud  v.  Waters,  3  Met. 
(Ky.)  304;  Allen  v.  King,  4  McLean,  128;  Hoffman  v.  Smith,  1  Caines, 
157;  R  8S  V.  Bydell,  5  Duer,  462;  Compton  v.  Blair,  46  Mich.  1  (drawer 
had  instructed  acceptor  not  to  pay  the  bill);  Harrison  v.  Trader,  29 
Ark.  85;   Beverldge  v.  Richmond,  14  Mo.  App.  405.     But  he  is  rntitled  to 

383 


§   144  EXCUSES    FOR   NON-PRESENTMENT,  ETC.       [CH.  XIII. 

dorser  cannot  require  presentment,  protest  and  notice, 
where  the  bill  or  note  is  issued  for  his  accommodation, 
under  an  agreement  or  understanding  that  he  will  provide 
for  payment  on  the  day  of  maturity.^  The  same  is  also  the 
rule,  where  the  drawer  or  indorser  has  been  provided  l)y 
the  acceptor  or  maker  with  funds  to  enable  him  to  take  up 

y 

the  paper  at  maturity.'^ 

There  is,  also,  no  right  to  demand  presentment,  protest, 
and  notice,  where  the  drawer  and  drawee  are  the  same 
natural  persons,  as  well  as  in  the  case  of  co-partnership 
and  corporations.^ 

§  143.  Void  note,  —  When  a  note  is  void  for  any  rea- 
son, as  between  the  maker  and  payee,  and  the  indorser 
knew  it  when  the  indorsement  was  made;  the  indorser  can- 
not require  presentment,  protest  and  notice.  He  guarantees 
the  validity  of  a  note,  which  he  cannot  expect  to  see 
honored  by  the  makers.* 

§  144.  Ignorance  of  and  failure  to  discover,  tlie 
address  of    parties. — The   failure  to   make    presentment 

notice  and  presentment,  if  he  had  reasonable  ground  for  expecting  pay- 
ment. Norton  v.  Piclsering,  8  B.  &  C.  610;  Miser  u.  Trovinger,  7  Ohio 
St.  281;  Lacoste  v.  Harper,  3  La.  Ann.  385  (48  Am.  Dec.  449). 

1  Letson  v.  Dunham,  2  Gr.  (13  N.  J.  L.)  307 ;  Torrey  v.  Foss,  40  Me.  74 ; 
Shriner  v.  Keller,  25  Pa.  St.  61 ;  Black  v.  Fizer,  10  Heisk.  48. 

2  Ray  V.  Smith,  17  Wall.  411;  Wright  v.  Anderson,  70  Me.  86;  Curtis 
V.  Martin,  20  111.  557. 

•"  Fairchild  v.  Ogdenburg  R.  R.  Co.,  15  N.  Y.  357  (69  Am.  Dec.  606); 
Fuller  V.  Hooper,  3  Gray,  334;  Bailey  v.  Southwestern  Bk.,  11  Fla.  206; 
Rhett  V.  Pole,  2  How.  457;  Dwight  v.  Scovill,  2  Conn.  054;  Maux  Ftrry 
Co.  V.  Branegan,  40  Ind.  361;  New  York  &c.  Co.  v.  Myer,  51  Ala.  325. 
The  same  rule  obtains  where  the  maker  of  a  note,  or  acceptor  of  a  bill, 
and  an  indorser  are  the  same  person.  Foland  v.  Boyd,  23  Pa.  St.  470; 
West  Branch  Bank  v.  Fulmer,  3  Pa.  St.  399  (40  Am.  Dec.  651) ;  Donnell 
V.  Lewis  Co.  Sav.  Bk.,  80  Mo.  165;  Castle  v.  Rickly,  44  Ohio  St.  490 
(9  N.  E.  136).     See  ante,  §  46. 

*  Copp  V.  M'Dugall,  9  Mass,    1;  Wyman  v.   Adams,    12   Cush.   210; 
TurnbuU  v.  Bowyer,   40  N.  Y.   456  (100  Am.  Dec.    523);  Susquehanna 
Val.  Bk.  V.  Loomis,  85  N.  Y.  207  (39  Am.  Rep.  652);  Perkins  v.  White, 
36  Ohio  St.  530;  Butler  v.  Slocomb,  33  La.  Ann.  170  (39  Am.  Rep,  265) 
In  this  case  the  defense  was  incapacity  of  maker   on  account  of  infancy. 

384 


CH.  XIII.]       EXCUSES    FOR   NON-PKESENTMENT,  ETC.  §   144 

and  to  give  notice  will  be  excused,  when  the  holder  or 
other  party,  whose  duty  it  is  to  do  any  of  these  things, 
cannot  after  the  exercise  of  due  diligence  find  out  the 
parties  to  whom  presentment  should  be  made  or  notice 
sent.  If  he  cannot  find  the  maker  of  a  note  or  acceptor 
of  a  bill,  presentment  for  payment  or  acceptance  will  be 
excused;  but  the  paper  must  be  protested,  and  notice  sent 
to  the  drawer  and  indorsers.  If  the  drawer  or  one  of  the 
iudorsers  cannot  be  found,  this  fact  will  excuse  notice  to 
that  particular  drawer  or  indorser,  but  not  presentment 
and  protest.^  But  as  soon  as  the  address  of  the  party  is 
discovered,  the  presentment  must  be  made,  or  the  notice 
sent,  as  the  case  may  be.^  But  in  the  case,  where  the 
maker  of  a  note  or  accei)tor  of  a  bill  has  changed  his  abode 
or  place  of  business  ;  whether  it  will  be  necessary  to  make 
presentment  to  him  at  his  new  address,  on  discovering  it, 
will  depend  upon  whether  it  is  in  the  same  State  or  country, 
or  in  a  different  one.  If  he  has  moved  to  another  State  or 
country,  the  holder  is  not  required  to  make  presentment; 
but  he  may  protest  at  once  for  non-payment  or  non-accept- 
ance, stating  the  fact  that  presentment  became  impossible 
by  the  departure  of  the  maker  or  acceptor  from  the  State 
or  country.  And  for  these  purposes,  the  States  of  the 
American  Union  are  considered  as  foreign  to  each  other. "^ 

1  May  V.  Coffin,  4.  Mass.  341;  Manufacturer's  Bank  v.  Hazard,  35  N. 
Y.  22C;  Isbell  v.  Lewis,  98  Ala.  560  (13  So.  335);  Walker  v.  Stetson,  14 
Ohio  St.  89  (84  Am.  Dec.  8G'2) ;  Garver  v.  Downie,  33  Cal.  17(5;  Davis  v. 
Eppler,  38  Kan.  G29  (IG  P.  793). 

2  Baldwin  v.  Richardson,  1  B.  &  C.  245;  Hutchison  v.  Crutcher  (Tenn. 
'97),  39  S.  W.  725;  McGeorge  v.  Chapman,  44  N.  J.  L.  (16  Vroom)  395; 
Beale  v.  Parish,  20  N.  Y.  407  (75  Am.  Dec.  414),  and  cases  cited  in  pre- 
ceding note. 

»  McGruder  v.  Bk.  of  Washington,  9  Wheat.  598;  Grafton  Bk.  r. 
Cox,  13  Gray,  503;  Sulzbackerr.  Bk.  of  Charleston,  2  Pickle,  201  (6  S.  W. 
129);  Adams  v.  Leland,  30  N.  Y.  399;  Smith  r.  Poillon,  87  N.  Y.  590  (41 
Am.  Rep.  402);  Reid  u.  Morri.son,  2  Watts  and  S.  401 ;  Leonard  i?.  Olson 
(Iowa,  '9G),  68  N.  W.  677;  Eaton  v.  McMahon,  42  Wis.  484;  Salisbury  v. 
Barjlison,  39  Minn.  365  (40  N.  W.  265);  Herrick  v.  Baldwin,  17  Minn. 
209~(10  Am.  Rep.  161).  But  see  Farwell  v.  St.  Paul  Trust  Co.,  45  Minn. 
495  (48  N.  W.  326). 

25  385 


§   144  EXCUSES    FOR    NON-PRESENTMENT,  ETC.       [CH.  XIII. 

Temporary  absence  does  not,  however,  excuse  failure  to 
present  for  payment. ^ 

If  the  maker  or  acceptor  is  notoriously  insolvent  and  has 
absconded,  or  has  been  committed  to  the  penitentiary,  it  is 
not  necessary  to  make  presentment  anywhere,  not  even  at 
his  former  residence  or  place  of  business.  But  insolvency 
alone  does  not  excuse  presentment.^ 

In  determining  what  amount  of  diligence  must  be  exer- 
cised in  searching  after  the  desired  address  of  a  party  to  a 
bill  or  note,  nothing  more  definite  can  be  stated  without 
going  into  the  details  of  particular  cases,  than  that  it  is 
that  degree  of  diligence  which  may  be  expected  of  a  reason- 
ably prudent  man  under  the  special  circumstances  of  the 
particular  case.  And  it  has  been  held  that  where  the 
inquiry  leads  to  a  reliable  person,  who  professes  to  know 
the  desired  address,  the  inquiry  need  not  be  pursued  any 
further,  and  the  party  will  nevertheless  be  held  bound 
on  the  paper  although  the  information  proves  to  be 
erroneous.^ 

But  until  some  such  definite  information  is  received,  in- 
quiry must  be  made  of  every  other  party  to  the  paper,  and 
of  everyone  else,  who  is  likely  to  know  the  address  which 
is  being  sought  after.* 

1  Glaser  v.  Rounds,  16  R.  I.  235  (14  A,  863). 

2  Hale  V.  Burr,  12  Mass.  89;  Schofleld  v.  Bayard,  3  Wend.  488;  Taylor 
V.  Snyder,  3  Den  145  (45  Am.  Dec.  457);  Lehman  v.  Jones,  1  Watts  &  S. 
126  (37  Am.  Dec.  455);  Cedar  Falls  Co.  v.  Wallace,  83  N.  C.  225;  Rat- 
cliffe  V.  Planters'  Bk.,  2  Snecd,  425;  First  Nat.  Bk.  v.  De  Morse  (Tex. 
Civ.  App.),  26  S.  W.  417  (maker  in  the  penitentiary);  Leonard  v.  Olson 
(.Iowa,  '96),  68  N.  W.  677 ;  Warrensburg  &c.  Assn.  v.  Zoll,  84  Mo.  94.  See 
contra  Farwtll  v.  St.  Paul  Trust  Co.,  45  Minn.  495  (48  N.  W.  326). 

3  Harris  v.  Robinson,  4  How.  336;  Brighton  &c.  Bank  v.  Philbrick,  40 
N.  H.  606;  Gawtry  v.  Doane,  51  N.  Y.  84;  Belden  v.  Lamb,  17  Conn.  441; 
Central  N.  Bk.  v.  Adams,  11  S.  C.  452  (32  Am.  Rep.  495). 

4  Lambert!).  Ghistlin,  9  How.  552;  Sweet  v.  Woodin,  72  Mich.  393  (40 
N.  W.  471) ;  Grafton  Bk.  v.  Cox,  13  Gray,  503;  Davis  v.  Eppler,  38  Kan. 
629  (16  P.  793);  Lawrence  v.  Miller,  16  N.  Y.  238;  Requa  v.  Collins,  51 
N.  Y.  144;  HofEmau  v.  Hollingsworth  (Ind.  App.),  37  N.  E.  960;  Isbell  v. 
Lewis,  98  Ala.  550  (13  So.  335)  ;  Gilchrist  v.  Donnell,  53  Mo.  591 ;  Haber 
V.  Brown,  101  Cal.  445  (35  P.  1035). 

386 


CH.  XIII.]       EXCUSES    FOR    NON-PRESENTMENT,  ETC.  §    146 

§  145.  Sickness,  death  or  accident  to  holder  or  to 
paper — Delay  in  transmission  by  mail. —  The  sickness 
or  death  of  the  holder,  or  the  happening  of  some  accident 
or  injury  to  him,  on  the  eve  of  the  maturity  of  the  paper, 
and  so  unexpected  that  provision  could  not  be  reasonably 
made  for  the  presentment,  protest  and  notice  by  another, 
have  been  held  to  be  good  excuses  for  the  failure  to  do 
these  things  at  the  required  time.  But  they  do  not  excuse 
the  complete  failure  to  do  them,  after  the  emergency  has 
passed,  and  sufficient  lime  has  elapsed  for  the  appointment 
of  another  to  act  for  the  holder.^  The  same  excuses  would 
be  sufficient,  if  the  accident  or  sickness  happened  to  the 
agent  of  the  holder,  or  to  an  indorser,  wh)  was  ex[)ect- 
ing  to  give  notices  of  dishonor  to  the  drawer  and  prior 
indorscis. 

If  a  l)ill  or  note  is  transmitted  by  mail,  whether  it  be  to 
an  agent  for  collection,  or  to  some  indorsee  in  full,  and  it 
should  be  lost  or  delayed  in  the  mail,  so  that  presentment 
could  not  be  made  on  the  day  of  maturity,  the  delay  in 
presentment,  protest  and  notice,  thereby  occasioned,  will 
be  excused. 2 

And  so,  also,  where  the  failure  to  receive  the  paper  in 
time  to  make  presentment  in  (\uq  season  is  occasioned  by 
the  immediate  indorser,  the  delay  in  i)resentment,  protest 
and  notice  will  not  discharge  him;  although,  it  seems,  it 
will  discharge  the  drawer  and  prior  indorsees,  who  did  not 
occasion  the  delay.'' 

§  14().   Possession  of  security  by  drawer  or  indorser. — 

A  difficult  question,  and  about  which  the  authorities    are 
contradictory,  is  how  far  will  the  ))<)ssessi()n  of  security  or 

1  White  r.  Stoddard,  11  Gray,  258  (71  Am.  Dec.  711);  Aymar  u.  Beer?, 
7  Cow.  705  (17  Am.  Dec.  538).  In  the  case  of  death  of  tlie  holder,  d<,l:iy 
in  presentment,  protest  and  notice  is  excusable,  until  the  executor  or 
adniiiiistrator  has  qualifled.     See  ante,  §§  115,  113. 

2  Windham  Bank  v.  Norton,  22  Conn.  213  (5G  Am.  Dec.  397);  Jones  v. 
Warden,  6  Watts  &  S.  399;  Pier  v.  Ileinrichshoffen,  C7  Mo.  1C3  (29  Am. 
Rep.  501);  Newbold  v.  Boraef,  155  Pa.  St.  227  (26  A.  305). 

'  Mason  r.  Pritchard,  9  Heisk.  793. 

387 


§   147  EXCUSES   FOR   NON-PRESENTMENT,  ETC.       [CH.  XIII. 

of  the  property  of  the  primary  obligor  by  the  drawer  or 
anindorser,  permit  the  holder  to  di-peuse  with  presentment, 
protest  and  notice,  as  to  such  drawer  or  indorser.  Prob- 
bably  all  the  cases  would  support  the  proposition,  that  while 
mere  possession  of  collaterals  to  secure  the  payment  of  the 
instrument  will  not  excuse  presentment  and  notice,  such  a 
drawer  or  indorser  could  not  require  these  things,  if  the 
acceptor  or  maker  has  made  an  assignment  of  all  his  prop- 
erty; since  there  would  be  nothing  left  in  the  hands  of 
such  acceptor  or  maker,  wherewith  to  make  payment  of  the 
bill  or  note  in  question.^ 

§  147.  Waiver  of  presentment,  protest  and  notice. — 

The  requirement  of  presentment,  protest  and  notice  is  for 
the  benefit  of  the  persons  secondarily  liable  ;  and  if  they 
see  fit  to  do  so,  they,  or  any  one  of  them,  may  by  agree- 
ment, express  or  implied,  waive  the  requirement,  and  bind 
themselves,  in  spite  of  the  omission  of  these  customary  acts. 
The  waiver  can  be  made  only  by  one  who  is  secondarily 
liable  on  a  bill  or  note,  or  by  his  duly  authorized  agent,^ 

1  Kramer  v.  Sandford,  4  Watts  &  S.  328  (39  Am.  Dec.  92)  ;  Creamer  v. 
Perry,  17  Pick.  332  (27  Am.  Dec.  297);  Seacord  v.  Miller,  13  N.  Y.  55; 
Whiltier  v.  Collins,  15  R.  I.  44  (23  A.  39)  ;  Wright  v.  Andrews,  70  Me. 
86;  Moses  v.  Ela,  43  N.  H.  557  (82  Am.  Dec.  175);  May  v.  Bois^eau,  8 
Leigh,  164;  Swan  v.  Hodges,  3  Head,  251;  Wilson  v.  Senier,  14  Wis. 
380;  Ray  v.  Smith,  17  Wail.  416.  Where  the  acceptor  or  maker  has  made 
an  assignment  for  the  benefit  of  creditors,  presentment  must  be  made 
to  such  assignee;  ante,  §  117. 

But  some  of  the  cases  maintain  that  presentment,  protest  and  notice 
may  be  omitted,  whenever  the  drawer  or  indorser  has  property  of  the 
primary  obligor,  which  fully  secures  hira  from  his  secondary  liability  on 
the  bill  or  note,  whether  it  constitutes  the  whole  or  only  a  part  of  the 
property  of  the  acceptor  or  maker.  Marshall  v.  Mitchell,  35  Me.  221  (58 
Am.  Dec.  697) ;  Second  N.  Bk.  v.  McGuire,  33  Ohio  St.  295  (31  Am.  Kep. 
539) ;  Durham  v.  Price,  5  Yerg.  300  (26  Am,  Dec.  267)  ;  Smith  v.  Lowns- 
dale,  6  Ore.  78. 

2  Standage  v.  Creighton,  5  C.  &  P.  406;  Central  Bank  v.  Davi?,  19 
Pick.  373;  Manney  v.  Coit,80N.  C.  300;  Seldner  y.  Mt.  Jackson  Nat.  Bk., 
66  Md.  488  (8  A.  262)  waiver  made  by  a  member  of  firm) ;  Brjant  v. 
Lord,  19  Minn,  397;  Star  Wagon  Co.  v.  Sweezey,  52  Iowa,  394  (3  N.  W. 
421)  ;  Farmer's  Bank  v.  Ewing,  78  Ky.  264  (39  Am.  Rep.  231). 

388 


CII.  XIII.]       EXCUSES   FOR   NON-PRESENTMENT,  ETC.  §    147 

and  it  must  be  made  to  the  holder  of  the  l)ill  or  note.  But 
if  it  is  made  to  the  holder,  the  waiver  will  inure  to  the 
benefit  of  any  subsequent  indorsee  or  transferee.^ 

If  the  waiver  is  made  by  the  drawer  of  a  bill,  and  it  is 
put  in  the  body  of  the  instrument,  it  constitutes  a  part  of 
the  contract  of  every  one  who  becomes  secondarily  liable 
thereon,  whether  as  drawer  or  indorser.^  But  if  it  appears 
over  the  signature  of  one  of  the  indorsers,  it  will  bind  him 
only,  and  not  any  other  prior  or  subsequent  indorser.^ 

The  waiver  may  be  written  on  the  bill  or  note,  or  on  a 
separate  paper ;^  and  while  it  is  doubtful,  whether  a  parol 
waiver  is  binding  on  the  party  making  it,  there  being 
authorities  for^  and  against^  the  proposition  ;  it  is  not  nec- 
essary that  the  waiver  should  be  couched  in  words  of  ex- 
press agreement.  The  waiver  will,  for  example,  be  inferred 
from  the  use  of  words  by  an  indorser,  which  show  his  in- 

1  Miller  v.  Hackley,  5  Johns.  375  (4  Am.  Dec.  372);  National  Bank  v. 
Lewis,  50  Vt.  622  (28  Am.  Rep.  5U);  Curtiss  v.  Martin,  20  111.  557; 
Olendorf  v.  Swatz,  5  Cal.  480  (03  Am.  Dec.  141). 

2  Hoover  v.  McCormick,  84  Wis.  215  (54  N.  W.  505)  ;  Farmers'  Bank  v. 
Ewing,  78  Ky.  2G6  (39  Am.  Rep.  231) ;  Deering  v.  Wiley,  56  111.  App.  309; 
Lowry  v.  Steele,  27  Ind  168;  Leeds  v.  Hamilton  Paint  &c.  Co.  (Tex. 
Civ.  App),  35  S.  W.  77;  Iowa  Val.  State  Bk.  u.  Sigstad  (Iowa),  65 
N.  W.  407;  Phillips  v.  Dippo  (Iowa),  61  N.  W.  2IG. 

s  Woodman  v.  Thurston,  8  Cush  157;  Johnson  v.  Parsons,  140  Mass. 
173  (4  N.  E.  196) ;  Stanley  v.  McElrath,  86  Cal.  449  (25  P.  16) ;  Cooke  v. 
Pomeroy,  65  Conn.  466  (32  A.  935);  Ilatley  v.  Jackson,  48  Md.  254; 
McMonigal  v.  Brown,  45  Ohio  St.  499  (15  N.  E.  860);  May  i;.  Boisseau, 
8  Leigh,  164;  Quintauce  v.  Goodrow,  16  Mont.  376;  Mehagan  v.  Mc- 
Manus,  35  Nel).  633  (53  N.  W.  574).     But  see  contra  Parshley  v.  Heath, 

69  Me.  90  (31  Am.  Rep.  246). 

*  Riker  v.  Sprague  Mfg.  Co.,  14  R.  I.  402  (51  Am.  Rep.  413)  ;  Spencer 
V.  Harvey,  17  Wend  489;  Duvall  v.  Farmers'  Bk.,  9  Gill  &  J.  31;  Hoover 
V.  Glasscock,  16  La.  242. 

5  Boyd  V.  Cleveland,  4  Pick.  525;  Ilallowfll  Nat.  Bk.  v.  Marston,  85 
Me.  488  (27  A.  529) ;  Barcl;iy  r.  Weaver,  19  Pa.  St.  396  (57  .\ra.  Doc.  6^1) ; 
Taylor  v.  French,  2  Lea,  260  (31  Am.  Rep.  609) ;  Markland  v.  McDaniel, 
51  Kan.  350  (.32  P.  1114);  Quintance  v.  Goodrow,  .16  Mont.  376. 

6  Rodney  V.  Wilson,  67  Mo.  123  (29  Am.  Rep.  499);   Beller  r.  Frost, 

70  Mo.  186;  FarwtU  v.  St.  Paul  Trust  Co.,  45  Minn.  495  (48  N.  W.  326); 
Kern  v.  Von  Phul,  7  Minn.  426  (82  Am.  Dec.  105)  ;  First  Nat.  Bk.  v.  Max- 
tleld,  83  Me.  576  (22  A.  479) 

389 


§   1  17  EXCUSES   FOR   NON-PRESENTMENT,  ETC.       [CH.  XIII. 

tention  to  be  bound  in  the  capacity  of  a  guarantor,  instead 
of  an  indorser,^ 

Presentment,  protest  and  notice  constitute  three  distinct 
acts,  which  are  required  to  be  done,  unless  excused  or 
waived,  in  order  to  hold  liable  a  secondary  obligor  to  a  bill 
or  note.  And  a  waiver  of  one  of  them  would  not  neces- 
sarily imply  a  waiver  of  all.  It  has  thus  been  held  that  a 
waiver  of  notice  will  not  include  by  implication  a  waiver  of 
demand  ;  although  it  would  seem  to  bo  more  reasonable  to 
infer  that  a  waiver  of  demand  would  include  a  waiver  of 
notice  as  well  as  protest,  since  demand  must  necessarily 
precede  protest  and  notice  of  dishonor. ^  But  the  later 
cases  show  a  tendency  to  follow  and  adopt  the  banking  cus- 
tom, wherever  it  is  found  to  be  an  estal)lished  custom,  to 
take  the  waiver  of  protest  as  a  complete  waiver  of  technical 
presentment  and  notice,  as  well  as  of  protest.  So  that  it  is 
now  very  generally  held,  both  as  to  foreign  and  inland  bills 
of  exchange,  that  a  waiver  of  protest  dispenses  also  with 
formal  demand  and  notice.^ 

1  Union  Bk.  v.  Magruder,  7  Pet.  287;  Davis  v.  Wells,  104  U.  S.  159; 
Furbei-  v.  Caverley,  42  N.  II.  74;  Seabury  v.  Hungerford,  2  Hill,  80; 
Airey  v.  Pearson,  37  Mo.  424;  Blanc  v.  Mut.  Nat.  Bk.,  28  La.  Ann.  921 
(26  Am.  Rep.  119) ;  Small  v.  Clarke,  51  Cal.  227;  Wells  v.  Davis,  2  Utah, 
411. 

2  Waiver  of  notice,  Berkshire  Bank  v.  Jones,  6  Mass.  524  (4  Am.  Dec. 
175) ;  Backus  v.  Shepherd,  11  Wend.  029;  Whiteley  v.  Allen,  56  Iowa,  224 
(41  Am.  Rep.  99;  9  N.  W.  190);  Camp  v.  Wiggin.«,  72  Iowa,  643;  34 
N.  W.  461  (waiver  of  provision  as  to  place  of  payment);  Sprague  v. 
Fletcher,  8  Oreg.  367  (34  Am.  Rep.  587). 

Waiver  of  demand.  Porter  v.  Kimball,  53  Barb.  467;  s.  c.  3  Lans. 
330;  Bryant  u.  Merchants'  Bk.,  8  Bush,  43;  Johnson  Co.  Sav.  Bk.  v. 
Lowe,  47  Mo.  App.  151  (demand  and  protest). 

Waiver  of  demand  and  notice,  including  protest.  Davis  v.  Wells,  104 
U.  S.  159;  Woodman  v.  Thrui«tou,  8  Cush.  157;  National  Exch.  Bk.  v. 
Kimball,  66  Ga.  758;  Baker  v.  Scott,  29  Kan.  136;  Jaccard  v.  Anderson, 
37  Mo.  91;  Wells  v.  Davis,  2  Utah,  411. 

3  Union  Bk.  v.  Hyde,  6  Wheat.  572;  City  Sav.  Bk.  v.  Hopson,  53  Conn. 
453  (5  A.  601);  Johnson  v.  Parsons,  140  Mass.  173  (4  N.  E.  196);  Cod- 
dington  v.  Davis,  1  N.  Y.  186 ;  Annville  N.  Bk.  v.  Kettering,  106  Pa.  St.  531 
(51  Am.  Rep.  536);  First  Nat.  Bank  v.  Falkenhan,  94  Cal.  141  (29  P.866); 
Williams  V.  Lewi«,  69  Ga.  762;  Harvey  v.  Nelson,  31  La.  Ann.  434  (33 
Am.  Rep.  222);  Baskin  v.  Crews,  66  Mo.  App.  22;  Jaccard  v.  Anderson, 

390 


CH.  XIII.]       EXCUSES   FOR   NON-PRESENTMENT,  ETC.  §   147 

It  is  not  material  whether  the  waiver  is  made  before  or 
after  the  negotiation  or  indorsement  of  the  bill  or  note  ; 
and  where  it  is  done  after  negotiation  and  before  maturity, 
any  statement  made  by  a  drawer  or  indorser  to  the  holder, 
such  as  the  uselessness  of  making  presentment  and  protest, 
which  is  calculated  to  induce  the  holder  to  refrain  from 
doing  these  required  things,  will  operate  as  a  waiver  of 
them.^ 

Requests  for  extension  of  the  time  of  payment,  when 
made  by,  or  with  the  consent,  of  the  drawer  or  indorser, 
constitute  a  waiver/''  as  well  as  a  distinct  promise  on  their 
part  to  pay  at  maturity.^ 

Although,  according  to  the  general  rules  of  the  law  of 
contracts,  it  would  appear  that  a  waiver  of  presentment, 
protest  and  notice  after  maturity  would  not  revive  an  ex- 
tinguished liability,  unless  such  waiver  was  supported  by  a 
new  consideration  ;  the  great  weight  of  authority  seems  to 
support  the  proposition,  that  no  new  consideration  is 
necessary  ;  and  that  a  waiver  has  the  effect  of  preserving 
the    liability  of  a   drawer  or  indorser,  whether  it  is  made 

37  Mo.  91;  Johnson  Co.  Sav.  Bk.  v.  Lowe,  47  Mo.  App.  151;  Carpenter 
V.  Reynolds,  42  Miss.  807;  Wilkie  v.  Chandon,  1  Wash.  St.  355  (25  P. 
464). 

J  Taylor  v.  French,  4  E.  D.  Smith,  458;  Moyer's  Appeal,  87  Pa.  St. 
129;  Hamraett  v.  Trueworthy,  51  Mo.  App.  281  (waiver  at  maturity); 
Boyd  V.  Bk.  of  Toledo,  32  Ohio  St.  526  (30  Am.  Rep.  624) ;  McMonisjal 
V.  Brown,  45  Ohio  St.  499  (15  N.  E.  860).  See  Landon  r.  Bryant  (Vt. 
'96),  37  A.  290. 

2  Leffingwell  v.  White,  1  Johns.  99  (1  Am.  Dec.  97);  Cady  r.  Brad- 
.<*haw,  116  N.  Y.  188  (22  N.  E.  371)  ;  Whitlier  v.  Collins,  15  R.  I.  44  (23 
A.  39);  Barclay  v.  Weaver,  19  Pa.  St.  396  (57  Am.  Dec.  6C1);  Jenkins 
V.  White,  147  Pa.  St.  303  (23  A.  556);  Amoskeag  Bk.  v.  Moore,  37  N.  H. 
539  (75  Am.  Doc.  156);  Hale  v.  Danforth,  46  Wis.  554  (1  N.  W.  284); 
Glaze  V.  Ferguson,  48  Kan.  157  (29  P.  396).  See  Landon  v.  Bryant  (Vt. 
'96),  37  A.  296. 

3  Sigerson  v.  Mathews,  20  How.  496;  Taunton  Bank  v.  Richardson,  5 
Pick,  436;  Markland  v  McDaulel,  61  Kan.  350  (32  P.  1114);  Scldner  o. 
Mt.  .Jackson  Nat.  Bk.,  66  Md.  488  (8.  A.  262)  ;  Leonard  v.  Gary,  10  Wend, 
504;  First  Nat.  Bk.  v.  Hartman,  110  Pa.  St.  196  (1  A.  271);  Siegers. 
Second  Nat.  Bk.,  132  Pa.  St.  307  (19  A.  217^);  Boyd  v.  Bk.  of  Toledo,  32 
Ohio  St.  526  (30  Am.  Rep.  624) ;  Lary  v.  Young,  13  Ark.  401  (58  Am.  Dec. 
332);  Bryant  v.  Wilcox,  49  Cal.  47. 

391 


§  147  EXCUSES   FOR   NON-PRESENTMENT,  ETC.       [CH.  XIII. 

before  or  after  maturity.  Usually,  waivers  after  maturity 
take  the  form  of  promises  to  pay  the  bill  or  note  in  ques- 
tion or  part-payment  of  the  same.  And  the  l)romi^^e  does 
not  constitute  a  good  waiver,  unless  it  is  made  after  full 
knowledge  of  the  failure  of  the  holder  to  make  presentment 
and  to  secure  protest  and  notice.^ 

But  the  waiver  after  maturity  will  be  good,  although  it 
is  made  in  ignorance  of  the  legal  effect  of  the  holder's 
failure  to  make  the  proper  presentment  and  protest  and  to 
give  the  required  notice.  The  universal  distinction  of  the 
law  between  ignorance  of  law  and  of  fact  is  here  applied .^ 

So,  also,  where  the  waiver  after  maturity  takes  the  form 
of  a  promise  to  pay,  it  must  be  an  absolute  promise  to 
pay.  A  mere  promise  to  "  see  what  can  be  done  "  will 
not  be  a  good  waiver.^ 

1  Sigerson  v.  Matthews,  20  How.  496;  Yeager  v.  Farwell,  13  Wall.  6; 
Matthews  v.  Allen,  16  Gray,  594  (78  Am.  Dec.  430);  Hobbs  v.  Straine, 
149  Mass.  212  (21  N.  E.  365) ;  Nat.  Bk.  of  Commerce  v.  Nat.  M.  B.  Assn., 
55  N.  Y.  211  (14  Am.  Rep.  232)  ;  Ross  v.  Hurd,  71  N.  Y.  14  (27  Am.  Rep. 
1);  Oxmond  v.  Varnum,  111  Pa.  St.  193  (2  A.  224);  TurnbuU  v.  Maddux, 
68  Md.  579  (13  A.  334);  Newberry  v.  Trowbridge,  13  Mich.  263;  Seb'ree 
Dep.  Bk.  V.  Moreland,  96  Ky.  150  (28  S.  W.  153);  Givens  v.  Merchants' 
Nat.  Bk.,  85  111.  442;  Lockwood  v.  Bock,  50  Minn.  142  (52  N.  W.  391); 
White  V.  Keith,  97  Ala.  668  (12  8o.  611);  State  Bk.  v.  Bartle,  114  Mo. 
276  (21  S.  W.  816);  Workingmen's  Bkg.  Co.  v.  Blell,  57  Mo.  App.  410; 
Davis  V.  Miller,  88  Iowa,  114  (55  N.  W.  89).  See  Reinke  v.  Wright,  93 
Wis.  368  (67  N.  W.  737).  But  see  contra  as  to  validity  of  waiver  after 
maturity  without  new  consideration,  Huntington  v.  Harvey,  4  Conn.  124; 
Lawrence  v.  Ralston,  3  Bibb.  1 ;  and  contra  as  to  effect  of  ignorance  of 
the  failure  to  make  demand  and  protest,  Debuys  v.  Mollere,  3  Mart. 
(La.),  318  (15  Am.  Dec.  159);  Bogart  v.  McClung,  11  Heisk.  105  (27  Am. 
Rep.  737). 

2  Mathews  v.  Allen,  16  Gray,  594  (78  Am.  Dec.  430) ;  Third  Nat.  Bk.  v. 
Ashworth,  105  Mass.  503;  Glidden  v.  Chamberlain,  167  Mass.  486  (46  N. 
E.  103);  Givens  v.  Merchants'  Nat.  Bk.,  85  111.442;  Hughes  v.  Bowen,  15 
Iowa,  446;  and,  generally,  the  cases  cited  in  preceding  note.  But,  see 
contra,  as  to  ignorance  of  fact  that  his  liability  was  that  of  an  indoreer. 
O'Rourke  v.  Hanchett,  89  Hun,  611. 

3  Prideaux  v.  Collier,  2  Stark.  57;  Klosterman  v.  Kage,  39  Mo.  App. 
60;  Grain  v.  Colwell,  8  Johns.  384;  Ross  v.  Hurd,  71  N.  Y.  14  (27  Am. 
Rep.  1);  Martin  v.  Perqua,  65  Hun,  225;  Tardy  u.  Boyd,  26  Gratt.  631; 
Isbell  V.  Lewis,  98  Ala.  550  (13  So.  335)  ;  Whittier  v.  Collins,  15  R.  I.  44 ; 
23  A.  39  (request  for  delay  no  waiver). 

392 


CH.  XIII.]       EXCUSES   FOR   NON-PRESENTMENT,  ETC.  §    148 

§  148.  Xo  damage  to  holder  —  Loss  or  destruction 
of  the  instrument. —  The  inere  fact,  Unit  the  drawer  or 
indorser  will  suffer  no  damage,  if  there  should  be  a  failure 
to  make  presentment  and  protest,  and  to  give  notice, 
would  not  be  a  sufficient  excuse,  whether  because  there 
were  no  funds  in  the  drawee's  hand-<,  or  the  acceptor  or 
maker  was  notoriously  insolvent.  In  all  such  cases,  pre- 
sentment, protest  and  notice  are  nevertheless  required, 
although  the  drawer  or  indorser  is  fully  cognizant  of  all 
the  facts. ^ 

The  loss  of  the  bill  or  note  prior  to  maturity  will  not 
excuse  presentment.  For  in  that  case,  the  commercial  law 
permits  ami  requires  presentment  to  be  made  without  ex- 
hibition of  the  instrument,  upon  statement  of  the  loss  and 
offer  of  a  bond  of  indemnity  against  the  subsequent  pre- 
sentation of  the  paper  by  a  bona  fide  holder.  If  this  is 
not  done,  the  drawer  and  indorsers  will  be  discharged.^ 

>< 

^  French  v.  Bk.  of  Columbia,  4  Cranch,  141;  Shaw  w.  Reed,  12  Pick. 
132;  Buck  v.  Cotton,  2  Conn,  12G;  Jackson  v.  Richards,  2  Caines,  343; 
Mannings.  Lyon,  70  Hun,  345;  Commercial  Bk.  v.  Hujjlies,  17  Wend.  94; 
National  Bk.  v.  Bradley,  117  N.  C.  52G  (23  S.  E.  455);  Hunt  w.  Wadleifth, 
26  Me.  271  (45  Am.  Dec.  108);  Cedar  Falls  Co.  v.  Wallace,  83  N.  C.  225; 
Farwell  v.  St.  Paul  Trust  Co.,  45  Minn.  495  (48  N.  W.  32(;) ;  Bassenhorst 
V.  Wilby,  45  Ohio  St.  333  (13  N.  E.  75);  Hill  v.  Martin,  12  Mart.  (La.), 
177  (13  Am.  Dec.  37:');  Reinke  v.  Wilson,  93  Wis.  3fi8  ((57  N.  W.  737); 
Clair  V.  Barr,  2  Mar.sh.  255  (12  Am.  Dtc.  391).  But  svaante,  §  144,  where 
the  insolvent  has  absconded. 

2  Fales  V.  Russell,  IG  Pick.  315;  McGregory  v.  McGregory,  107  Mass. 
643;  Yerkes  v.  Blodgett,  48  Mich.  211;  Armstrong  v.  Lewi.«,  14  Minn. 
40G;  Smith  v.  Rockwell,  2  Hill,  184.  If  a  bill  is  drawn  in  duplicate  and 
the  original  is  lost,  a  duplicate  may  be  used  in  presentment  and  demand. 
Any  reasonable  delay  in  hunting  for  the  original  will  be  excu.sed. 
Benton  v.  Martin,  31  N.  Y.  382;  Angaletos  v.  Meridian  Nat.  Bank,  4  Ind. 
App.  573  (31  N.  E.  3G8).  But  a  bond  of  indemnity  need  not  be  offered, 
if  t!ie  paper  is  non-negotiable.  Wright  v.  Wright,  54  N.  Y.  437;  Allen  v. 
Reiil),  15Nev.  452.  Or,  in  some  States  where,  in  the  case  of  a  negotiable 
instrument,  its  partial  or  total  destruction  by  Arc  or  otherwise  has  bt  en 
proven  beyond  all  reasonable  doubt.  Bank  of  U.  S.  v.  Sill,  6  Conn.  lOG 
(13  Am.  Dec.  44);  Thayer  v.  King,  15  Ohio  St.  242  (45  Am.  Dec.  571); 
Scott  V.  Meeker,  20  Hun,  IGl;  Des  Arts  v.  Leggett,  16  N.  Y.  582;  Wade 
V.  Wade,  12  III.  89. 

393 


ILL.  CAS.       EXCUSES  FOU  NON-PRESENTMENT,  ETC.      [CII.  XIII. 


ILLUSTRATIVE   CASES. 

Morgan  V.  Bank  of  Louisville,  4  Bush,  82. 
Culver  V.  Marks,  122  Ind.  554  (28  N.  E.  1086). 
Hobbs  V.  Straine,  149  Mass.  212  (21  N.  E.  365). 


Presentment,  Protest  and  Notice  Excnsed  l>y  War  or  Dis- 
tvirbances  of  Public  Order,  Sufficient  to  Prevent  the 
Conduct  of  Business. 

Morgan  v.  Bank  of  Louisville,  4  Bush,  82. 

Chief  Justice  Williams.  This  was  a  suit  upon  the  note  of 
Morgan  for  two  thousand  five  hundred  and  ninety-two  dollars, 
dated  New  Orleans,  La.,  January  23,  1861,  payable  at  the  office 
of  Pilcher  &  Goodrich,  New  Orleans,  at  nine  months'  time,  with 
eight  per  cent  interest,  and  indorsed  by  Pilcher  &  Goodrich  and 
B.  P.  Scally.  The  note  was  not  paid  at  maturity,  but  protested 
by  a  notary  public  in  New  Orleans. 

Morgan,  the  maker,  let  judgment  go  by  default,  but  Scally,  the 
indorser,  insists  that  he  is  not  liable. 

The  evidence  establishes  the  following  facts,  to  wit:  That 
Scally  resided  in  Louisville,  Ky.,  when  the  note  fell  due,  and 
ever  since  ;  that  there  was  then  a  war  between  the  Southern  and 
Northern  States,  and  no  mail  communication  between  New  Orleans 
and  Louisville;  that  the  latter  post  had  fallen  into  the  Federal 
possession,  and  a  mail  sent  hence  to  New  York  May  3,  1862  ;  from 
which  time  mail  communication  became  regular  and  safe  once  a 
week ;  and  that  the  blockade  of  New  Orleans,  by  order  of  the  Presi- 
dent of  the  United  States,  was  raised  June  1,  1862  ;  that  the  said 
paper  was  held  by  the  New  Orleans  Canal  and  Banking  Company 
until  November  20,  1862,  when  it  was  sent  by  express  to  the  Bank 
of  Louisville,  at  Louisville,  Kentucky,  which  owned  it ;  and  that 
December  5,  1862,  the  cashier  of  the  Bank  of  Louisville  deposited 
a  notice  in  the  post  office  at  Louisville,  notifying  Scally  of  the 
dishonor  of  said  paper ;  that  by  the  laws  of  Louisiana  and  cus- 
tom of  merchants  such  paper  is  regarded  as  commercial. 

Was  this  a  legal  notice  to  the  indorser,  Scally? 

It  is  insisted  by  ai)pellee  that  no  protest  or  notice  was  neces- 
sary, because  of  the  late  Civil  War,  Louisville  and  New  Orleans 
then  being  within  the  military  lines,  and  held  Viy  different  bellig- 
erents, and  claims  that  this  has  been  so  adjudicated  by  this 
Court  in  Graves  v.  Lilford,  2  Duvall,  108  ;  Bell,  Berkley  &  Co.  v. 
Hall,  lb.  292,  and  Berry,  etc.  v.  Southern  Bank,  lb.  379. 

The  first  case  was  upon  assigned  notes  —  not  commercial 
paper  —  hence  no  question  of  commercial  law  was  involved. 

In  the  case  of  Bell,  Berkley  &  Co.  v.  Hall,  suit,  with  attach- 
ment,, was  brought  but  a  few  days  before  the  bill  of  exchange  fell 
due,  January  13,  1862.  It  had  been  drawn  and  accepted  in 
Kentucky,  but  payable  in  New  Orleans ;  the  war  was  flagrant 

394 


CU.  XIII.]     EXCUSES  FOR  NON-PRESENTMKNT,  ETC.       ILL.  CAS. 

when  it  fell  due  ;  the  bill  had  not  been  forwarded  to  New  Orleans 
for  payment,  but  was  in  suit  in  Kentucky ;  it  would  have  been 
illegal  to  attempt  then  to  collect  this  bill  in  New  Orleans ;  the 
maker  and  indorsers  of  the  bill  not  only  had  the  presumed  notice 
of  open  hostilities  between  the  two  States,  but  tiie  actual  notice 
by  suit  that  the  holder  was  looking  to  them. 

In  Berry  v.  Southern  Bank,  tlie  bills  of  exchange  were  drawn 
and  indorsed  in  Kentucky  and  sold  to  a  Kentucky  l)ank,  addressed 
to  a  firm  in  New  Oilcans,  the  very  day  of  the  President's  procla- 
mation of  blockade,  the  official  notification  of  war  between  Ken- 
tucky and  Louisiana,  and  which  were  not  payable  until  after  the 
Congressional  action  of  non-intercourse  and  the  President's 
proclamation  thereof. 

These  bills  were  not  accepted,  and  no  evidence  that  they  were 
ever  in  New  Orleans  ;  but  suit  was  prosecuted  upon  them  against 
the  drawer  and  indorsers,  who  resided  in  Kentucky.  It  was  held, 
upon  tbese  facts,  that  the  war  rendered  it  not  only  unnecessary, 
but  illegal,  to  send  said  hills  to  New  Orleans  for  collection  ;  and, 
therefore,  protest  was  unnecessar}-  and  notice  immaterial,  as  the 
public  war  itself  was  a  notification  ;  and  this  doctrine  is  well 
announced  by  the  court  of  error  in  New  York  (Griswald  v. 
Waddington,  16  Johns.  443),  well  drawing  a  distinction  between 
commercial  paper  drawn  in  one  country,  payable  in  another, 
before  and  after  war  breaks  out  between  these  countries. 

But  the  facts  in  the  case  now  under  consideration  are  quite 
different  from  those  in  Berry  v.  Southern  Bank.  In  this  case  the 
paper  was  made  in  New  Orleans  befoie  the  war  broke  out,  paya- 
ble in  New  Orleans  after  it  broke  out ;  the  maker  and  first 
indorsers  were  residents  of  Louisiana  when  it  fell  duo,  and  the 
paper  held  by  a  New  Orleans  bank,  though  it  belonged  to  a  Ken- 
tucky bank,  and  the  last  indorser,  who  is  now  resisting  it,  was  a 
resi(lent  of  Kentucky. 

The  war  could  be  no  notice  to  him  that  the  maker  and  first 
indorsers,  who  were  residents  of  Louisiana,  had  not  paid  it  to  a 
Louisiana  holder;  therefore  it  was  essential  to  notify  him  of  the 
fact  at  the  earliest  practicable  i)eriod. 

The  New  Orleans  holder  very  pro|)erly  had  it  duly  presented 
and  i)rotested  for  non-payment,  and  nf)tified  the  Louisiana  parties 
thereof,  but  could  not  then  notify  the  Kentucky  parties.  But 
reasonable  diligence  would  not  require  a  sending  of  the  notice  by 
the  very  first  mail  sent  out  by  the  military  authorities  from  New 
Orleans,  through  a  portion  of  the  enemy's  country,  because  the 
sending  of  such  mail  might  not  be  known,  nor  might  be  safe  if 
known.  When,  however,  the  mail  became  regular,  and  notoiious, 
and  safe,  it  was  the  duty  of  the  New  Orleans  holder  to  notify  its 
principal  that  it  might  notify  the  antecedent  Kentucky  parties. 

In  House  v.  Adams,  48  Pa.  St.  206,  the  Supreme  Court  of 
Pennsylvania,  in  case  of  two  bills  of  exchange  drawn  and 
indorsed  in  that  State,  on  a  New  Orleans  house,  and  which  were 
protested  —  the  first  June   11,  1H61,  the  second  July  29,  1861  — 

395 


ILL.  CAS.       EXCUSES  FOR  NON-PRESENTMENT,  ETC.      [CH.  XIII. 

and  notice  of  dishonor  received  by  the  holders  at  Pittsburg, 
July  11,  1862,  and  was  immediately  delivered  to  the  antecedent 
parties  there,  held  upon  the  authority  of  Patience  v.  Townley,  2 
Smith's  Eiig.  R.  224,  and  Hupkins  v.  Page,  2  Brock  U.  S.  R. 
20,  that  notice  of  tlie  dishonor  of  such  paper  was  essential  so  soon 
as  it  could  reasonably  be  made ;  but  as,  from  the  evidence,  it 
appeared  that  the  first  mail  received  at  Pittsburg  from  New 
Orleans  was  about  July  1,  1862,  and  considerable  intervals 
between  them,  the  notice  was  deemed  reasonable  and  the 
indorsers  held  liable. 

The  blockade  was  removed  from  the  port  of  New  Orleans  June 
1,  1862.  The  mails  were  regularly  sent  to  New  York,  and  thence 
to  the  other  places  within  the  Federal  Hues  regularly  once  a  week. 
There  appears  no  reasonable  excuse  for  delaying  the  sending  of 
this  paper  from  New  Orleans  until  November  20,  1862.  A  delay 
of  five  months  and  twenty  days  after  the  blockade  was  raised, 
with  regular  weekly  mails,  which  had  gone  safely  once  a  week 
for  a  month,  cannot  be  deemed  reasonable,  nor  accounted  for  by 
the  then  political  situation  of  the  countr3\ 

The  ports  of  the  Gulf  and  Southern  Atlantic  were  blockaded 
by  the  Federal  nav}' ;  no  part  of  the  route  from  New  York  to 
Louisville  was  through  the  enemy's  country,  or  in  their  posses- 
sion ;  hence  the  line  of  communication  between  New  Orleans  and 
Louisville,  via  New  York,  remained  open  and  uninterrupted. 

Wherefore  the  judgment  is  reversed  as  to  Scally,  with  direc- 
tions for  further  proceedings  in  accordance  herewith. 


Presentment  of  Check  for  Payment  and  Notice  of 
Non-payment  Excused  Where  the  Drawer  has  no 
Funds  on  Deposit  at  tlie    Banlt, 

Culver  V.  Marks,  122  Ind.  554  (23  N.  E.  1080). 

Olds,  J.  This  is  an  action  by  Jacob  F.  Marks  against 
Malinda  Culver,  administratrix  of  the  estate  of  Moses  C.  Culver, 
deceased,  to  recover  a  claim  against  the  estate  of  the  decedent. 
It  is  contended  by  the  appellee  that  the  appeal  was  not  taken  and 
perfected  within  the  time  allowed  by  statute.  Tlie  appellant 
asked  and  obtained  leave  of  this  court  to  ajjpeal,  which  disposed 
of  this  question,  aud  it  is  unnecessary  to  consider  it  further. 

Appellant's  decedent  died  in  December,  1884,  and  the  claim 
was  filed  in  February,  1885.  The  basis  of  the  claim  is  three 
checks,  copies  of  which  are  filed  with  the  complaint,  and  raaiked 
"A,"  '' B,''  and  "  C,"  and  are  in  the  following  words  and  fig- 
ures: (A)  "La  Fayette,  In<1.,  Nov.  1st,  1869.  The  First 
National  Bank:  Pay  to  J.  F.  Marks  one  thousand  dollars. 
$1,000.  [Signed]  M.  C.  Culver."  (B)  "  La  Fayette,  Ind., 
Nov.  8th,  1870.  First  National  Bank:  Pay  to  J.  F.  Marks  or 
bearer  five  hundred  dollars.     §500.      [Signed]   M.  C.  Culver," 

396 


CH.XIII.]     EXCUSES  FOR  NON-PRESENTMENT,  ETC.       ILL.  CAS. 

(C)  "  La  Fayette,  Ind.,  Dec.  29th,  1870.  First  National  Bank: 
Pay  to  J.  F.  Marks  or  bearer  one  thousand  dollars.  gl.OOO.OO. 
[Signed]  M.  C.  Culver."  Also  three  promissory  notes, —  one 
dated  December  17,  1870,  for  $1,051.34,  executed  by  the  dece- 
dent to  appellee;  one  dated  Septemlier  1,  1870,  for  S550,  exe- 
cuted by  decedent  to  appellee;  and  one  dated  July  29,  1872,  for 
§2,000,  executed  by  the  decedent  to  one  Smith  Lee.  and  assigned 
by  him  to  appellee. 

There  are  some  19  paragraphs  of  complaint,  most  of 
them  declaring  upon  the  checks,  and  varying  in  their  alle- 
gations. There  was  no  further  [pleading  filed.  There  was 
a  trial  by  the  court  under  the  statute,  and  a  finding  for  the 
appellee  on  the  checks  and  notes,  aggregating  $7,694.31.  The 
court's  finding  is  as  follows:  The  court  being  in  all  things  fully 
advised,  finds  that  there  is  due  the  plaintiff,  of  and  from  the 
administratrix,  to  be  paid  out  of  the  estate  of  the  decedent,  JMoscs 
C.  Culver,  on  account  of  the  note  for  $2,000,  and  dated  July  29, 
1872,  the  sum  of  eight  hundred  and  twenty-three  dollars  and 
twelve  cents  ($823.12)  ;  on  the  due-bill  dated  December  17,  1870, 
the  &ura  of  seven  hundred  and  ninety-six  dollars  and  fifiy-nine 
cents  (S79G.59);  on  the  two  one  thousand  dollar  checks,  one 
dated  November  21,  1869,  and  one  dated  December  29,  1870, 
the  sum  of  three  thousand  nine  hundred  and  thirty-six  dollars 
and  twenty  six  cents  ($3,936.26);  on  the  five  hundred 
and  fifty  dollar  note,  dated  September  1,  1870,  the  sum 
of  one  thousand  three  hundred  and  eightj'-three  dollars  and 
thirty-four  cents  ($1,383.34),  including  one  hundred  and  twent}-- 
five  dollars  and  sevent^'-five  cents  as  and  for  attorne3''s  fees ; 
and  on  the  check  for  five  hundred  dollars,  and  dated  No- 
vember 8,  1870,  the  sum  of  seven  hundred  and  fifty-five  dollars, 
being  the  principal  and  interest  thereon  from  the  1st  day  of 
January,  1878;  and  making  in  the  aggregate,  the  sum  of  seven 
thousand  six  hundred  and  ninety-four  dollars  and  thirty-one 
cents  ($7,694.31).  "  The  appellant  demurred  to  each  paragraph 
of  the  complaint,  which  was  overruled,  and  exceptions.  The 
appellant  also  filed  a  motion  for  a  new  trial,  which  was  overruled, 
and  exceptions ;  also  moved  the  court  in  arrest  of  judgment, 
which  was  overruled  and  exceptions  reserved ;  and  these  various 
rulings  of  the  court  are  assigned  as  error.  No  question  is  pre- 
sented as  to  the  sufficiency  of  the  paragraphs  on  the  notes,  or  the 
right  of  the  appellee  to  recover  the  amount  due  upon  them. 

The  paragraphs  of  the  complaint  are  numerous,  and  we  do  not 
deem  it  necessary  to  set  them  out,  as  we  can  slate  the  questions 
presented  in  much  loss  space.  They  all  declare  upon  the  checks, 
and  aver  facts  to  excuse  the  necessity  for  [)reseiitment  to  the 
bank  for  payment,  and  notice  to  the  drawer  of  non-payment  dif- 
fering in  the  averments  in  this  particular:  Some  aver  that  Culver, 
the  drawer,  did  not  have  money  or  funds  sufficient  in  amount  in 
said  bank  on  the  day  of  the  date  and  delivery  of  said  check,  nor  did 
he  have  enough    on    the    day    after   the    date  of    drawing    an(l 

31)7 


ILL.  CAS.       EXCUSES  FOR  NOX-PRESENTMENT,  ETC.      [CH.  XIII. 

delivering  said  check  in  said  bank,  to  pay  said  check.  The 
ninth  paragraph,  declaring  on  the  check  dated  November  1,  1869, 
alleges  that  Culver,  the  drawer,  did  not  have  money  or  means 
enough  in  said  bank  on  the  day  of  the  date  of  said  check,  nor  did 
he  have  sufficient  funds  or  money  in  said  bank  until  tbe  11th  day 
of  November,  1869,  to  pay  said  check.  Others  aver  that  all  the 
money  or  m^eans  said  Moses  C.  Culver  had  in  said  bank  on  the 
(lay  of  tbe  date  of  said  check,  or  had  at  any  time  thereafter  in 
said  bank,  were,  by  said  check,  paid  to  said  Moses  C.  Culver,  or 
to  other  persons  on  the  order,  check,  or  request  of  the  said  Cul- 
ver, and  not  to  the  plaintiff  on  account  of  said  check.  Others 
aver  that  at  the  time  of  the  execution  and  delivery  of  said  check 
the  said  Moses  C.  Culver  requested  the  plaintiff  not  to  present 
said  check  to  said  bank  for  payment,  and  that  he,  the  said  Moses 
C.  Culver,  should  be  permitted  to  pay,  and  that  be,  the  said  Culver, 
would  pay,  said  check  without  presentment  thereof  for  payment 
to  said  bank ;  and  the  plaintiff  then  and  there  promised  not  to 
present  for  payment  said  check  at  said  bank,  and  to  permit  the 
said  Culver  to  pa^^  the  same  without  presentment  for  payment  at 
said  bank ;  that  in  pursuance  of  said  request  of  said  Culver,  and 
the  promise  of  the  plaintiff,  the  plaintiff  did  not  present  said 
check,  nor  was  the  same  presented  to  said  bank  for  payment. 
The  fourteenth  paragraph  on  the  check,  dated  December  29, 
1870,  alleges  that  Culver  did  not  have  money  or  means  sufficient 
in  amount  in  said  bank  on  the  day  of  the  date  of  said  check,  nor 
did  he  have  enough  means  or  money  in  said  bank  for  more  than 
30  days  thereafter,  to  pay  said  check. 

The  foregoing  are  the  averments  in  \^e  respective  paragraphs 
relating  to  the  checks.  The  several  paragraphs  are,  respectively, 
based  on  the  checks  as  the  foundation  of  the  action,  and  the 
checks  constitute  a  cause  of  action,  Henshaw  v.  Root,  60  Ind. 
220;  Fletcher  v.  Pierson,  69  Ind.  281.  The  general  rule  is  that 
a  check  must  be  presented  to  the  bank  for  paj'ment,  and  that 
notice  of  non-payment  must  be  given  to  the  drawer,  but  there  are 
exceptions  to  this  rule.  In  Bolles  Banks,  p.  325,  §  333,  it  is 
said:  "Another  excuse  is  the  lack  of  funds  with  the  drawee. 
The  drawing  of  a  check  under  such  circumstances,  unexplained, 
is  a  fraud  which  deprives  the  maker  of  every  right  to  require  pre- 
sentation and  demand  of  payment."  In  Franklin  v.  Vanderpool, 
1  Hall,  78,  it  is  held  that,  if  a  maker  of  a  bank-check  has  no  funds 
in  the  bank  upon  which  it  is  drawn  at  the  date  of  the  check,  it  is 
not  necessary  for  the  holder  to  present  such  check  at  bank  for 
payment,  in  order  to  enable  him  to  sustain  an  action  upon  it 
against  the  maker.  Where  the  maker  of  a  check  withdraws  his 
funds  from  the  bank,  so  that  the  check  cannot  be  paid,  no  demand 
and  notice  are  necessary.  Bolles  Banks,  supra ;  Sutcliffe  v. 
McDowell,  2  Nott  &  McC.  251.  In  2  Morse  Banks  (3d  Ed.), 
§  425,  it  is  said:  "Presentment,  however,  may  be  altogether 
dispensed  with,  provided  that  if  made  it  could  not  at  the  time  be 
legall}^  and    prooerly  met   bj'  the   bank  with  a  payment ;  "  and 

398 


CH.  XIII.]     EXCUSES  FOR  NON-PRESENTMENT,  ETC.       ILL.  CAS. 

numerous  authorities  are  cited  in  support  of  this  statement.  This 
is  in  accordance  with  a  well-settled  legal  principle  that  the  law 
requires  no  unnecessary  thing  to  be  done.  Checks  are  presumed 
to  be  drawn  against  a  fund  deposited  in  the  bank,  out  of  which 
they  are  to  be  paid  ;  and  if  there  is  no  such  fund  so  deposited  out 
of  which  they  can  be  paid,  the  presumption  is  that  a  demand  will 
be  of  no  avail,  and  useless  ;  and  it  must  be  further  presumed  that 
the  drawer  knows  the  state  of  his  account  with  the  bank,  and 
whether  or  not  he  has  sufficient  funds  on  deposit  to  pay  the  check, 
and  if  he  has  not,  no  demand  is  necessary;  and,  if  no  demand  be 
necessary,  then  certainly  no  notice  is  necessarj', —  being  no  de- 
mand, there  could  be  no  notice  of  demand.  It  is  further  stated 
in  Morse  Banks,  supra,  that  "  regular  presentation  ma}^  be  waived 
by  conduct  or  representations.  Any  agreement,  express  or  im- 
plied, will  excuse  any  want  of  the  usual  formalities."  It  is 
further  said  that  "  a  check  given  as  evidence  of  a  loan  to  the 
drawer  need  not  l)e  presented  to  the  drawee." 

This  doctrine  is  held  in  the  case  of  Currier  v.  Davis,  111  Mass. 
480.  It  is  the  well-settled  rule  that,  in  the  absence  of  any  agree- 
ment or  special  circumstances,  a  check  shall  be  presented  at  least 
within  banking  hours  on  the  day  following  the  date  of  its  delivery, 
if  the  bank  on  which  it  is  drawn  is  in  the  same  place  where  the 
payee  lives  or  does  business,  and  that  the  first  presentment  fixes 
the  rights  of  the  parties.  If,  upon  such  presentation,  tbc  bank 
offers  and  is  willing  to  pay,  and  the  payee  refuses  to  accei)t  it, 
and  afterwards, ^and  before  it  is  again  presented,  the  bank  fails, 
as  between  the  payee  and  the  drawer  the  payee  suffers  the  loss. 
See  2  Morse,  Banks,  §§  421,  420.  And  it  must  necessaril}- fol- 
low, from  the  well-settled  law  regarding  checks,  tliatif  the  drawer 
has  no  funds  in  the  bank  at  the  time  the  payee  is  by  law  required 
to  present  tlie  check  for  payment,  no  necessity  for  demand  and 
notice  exists,  and  that  the  liability  of  the  parties  is  fixed  at  tliis 
time.  That  is  to  sa}-,  if  demand  and  notice  be  necessary,  demand 
must  be  made  on  the  day  following  the  delivery  of  tlie  check,  if 
the  bank  is  in  the  same  place  where  the  payee  lives,  and  docs 
business,  and  notice  must  be  given,  and  the  liability  is  thereby- 
then  and  there  fixed,  and  the  payee  may  immediately  bring  suit. 
So,  on  the  other  hand,  it  must  logically  flow  and  necessarily  fol- 
low from  this  rule  that  if  the  drawer  has  no  money  or  funds  on 
deposit  in  the  bank  at  the  time  the  payee  is  required  to  present 
the  check,  then  the  liability  of  the  drawer  is  fixed  without  pre- 
sentation and  notice,  and  the  ])ayee  may  at  once  bring  suit  on  the 
check;  and  whatever  takes  j^luce  afterwards  in  the  state  of  his 
account  at  the  bank  can  make  no  difference,  and  will  not  change 
the  rights  of  the  parties.  The  authorities  cited,  we  think,  are 
decisive  of  all  the  questions  presented  by  the  rulings  on  the 
demurrers  to  the  several  paragrajilis  of  complaint;  and  that  the 
general  rule  is  that  the  payee  must  present  the  check  for  pay- 
ment, and  give  notice  to  the  drawer  of  its  non-payment,  but  that 
no  presentation  or  notice  is  necessary  when  the  drawer  has  no 

3i>9 


ILL.  CAS.      EXCUSES  FOR  NON-PRESENTMENT,  ETC.     [CH.  XIII. 

funds  on  deposit  for  the  payment  of  the  cheek  at  the  time  when 
the  cheek  should  be  presented ;  or  if  he  have  funds  on  deposit  at 
the  time,  and  withdraw  the  same,  leaving  none  on  deposit  for  the 
payment  of  the  check,  or  if  by  consent  of  the  drawee  or  agent 
between  him  and  the  payee  the  check  is  not  to  be  presented  at 
the  bank  for  payment,  then  there  is  no  necessity  for  presentation 
and  notice.  There  was  no  error  in  overruling  the  demurrers  to 
the  complaint. 

It  is  contended  that  the  right  of  recovery  was  barred  b}"  limita- 
tion. What  we  have  said  in  passing  upon  the  complaint  disposes 
of  this  question.  The  check  being  in  writing,  and  conslituling 
the  foundation  of  the  action,  it  is  not  barred  by  the  statute  of 
limitations.  A  question  is  made  as  to  the  check.  It  is  con- 
tended that  as  the  complaint  alleges  that  the  checks  were  drawn 
on  the  "  First  National  Bank  of  La  Fayette,  Indiana,"  and  that 
there  was  no  proof  of  such  fact  except  that  the  checks  were  read 
in  evidence  and  tliat  the  checks  are  drawn  on  the  "  First  National 
Bank,"  that  the  proof  made  by  the  introduction  of  the  checks 
does  not  correspond  with  the  averments  of  the  complaint.  The 
checks  were  copied  and  made  a  part  of  the  respective  paragraphs 
of  the  complaint  which  declared  u[)on  them,  and  showed  affirma- 
tively in  each  paragraph  of  the  complaint  the  name  of  the  bank 
upon  which  they  were  drawn.  They  were  each  dated  at  "  La 
Fayette,  Indiana,"  and  drawn  on  the  "First  National  Bank," 
and  the  name  of  no  other  jdace  or  bank  appeared  upon  the  check  ; 
and  the  evidence  showed  that  there  was  a  First  National  Bank  at 
La  Fayette,  and  that  fair  presumption,  in  the  absence  of  anything 
appearing  to  the  contrary,  is  that  it  related  to,  and  .that  they 
were  drawn  upon,  that  bank.  "Walker  r.  Woollen,  54  Ind.  164; 
Roach  V.  Hill,  Id.  245  ;  Dutch  v.  Boyd,  81  Ind.  146. 

It  is  not  contended  that  there  is  no  evidence  to  support  the 
allegations  of  the  paragraphs  of  the  complaint  which  allege  that  it 
was  agreed  that  appellee  should  not  present  the  checks  at  the 
bank  for  paj^ment,  but  that  Culver  should  pay  them  without  pre- 
sentation. This  can  make  no  difference.  There  were  several 
other  paragraphs  of  the  complaint,  respectively  declaring  on 
each  of  the  checks,  and,  if  the  evidence  supported  one  paragraph 
declaring  on  each  check,  the  finding  would  be  sustained.  It  was 
not  necessary,  because  appellee  declared  on  each  cause  of  action 
in  several  various  foims  of  averments,  that  he  should  prove  the 
allegations  of  each  paragraph  of  his  complaint. 

It  is  contended  that  the  assessment  of  the  amount  of  recovery 
is  too  large ;  that  the  court  allowed  interest  upon  the  checks.  In 
this  there  is  no  error.  Under  the  law,  as  we  have  stated,  the 
cause  of  action  accrued  upon  the  cheeks  at  the  time  they  should 
have  been  presented,  if  there  had  been  mone}'  in  the  bank  for 
their  payment ;  and,  as  the  payee  resided  at  the  same  place  where 
the  bank  was  doing  business,  this  would  be  the  next  day  after  the 
delivery  of  the  check,  and  appellee  is  entitled  to  interest  from 
that  date. 
400 


CU.  XIII.]     EXCUSES  FOR  NON-PRESENTMENT,  ETC.       ILL.  CAS. 

We  now  come  to  questions  presented  by  the  motion  for  new 
trial  on  the  admission  and  rejection  of  evidence.  The  appellant 
offered  to  prove  by  Mr.  M.  L.  Pierce,  president  of  the  bank,  that 
if,  at  the  date  of  several  cliecks,  or  at  any  time  during  the  years 
1869  and  1870,  checks  for  like  amounts  liail  been  presented  to 
the  First  National  Bank,  drawn  by  Moses  C.  Culver  by  the  bolder 
of  such  checks,  they  would  liave  been  paid.  Tlie  offer  was  prop- 
erly made.  The  witness  was  sworn,  and  asked  the  proper  ques- 
tion, and  the  evidence  was  excluded.  In  this  ruling  of  the  court 
there  was  no  error.  The  evidence  offered  is  to  the  effect  that  the 
bank  could  have  paid  the  checks  without  rcgaid  to  whether 
Mr.  Culver  had  funds  in  the  bank  or  not.  It  is  a  well-settled 
rule  that  the  liabilities  of  the  parties  are  fixed  by  the  fact  of  the 
drawer  liaving  or  not  having  funds  in  the  bank  out  of  whicL  the 
check  could  be  lawfully  paid,  and  the  fact  that  he  had  no  funds 
in  ihe  bank  against  which  the  check  is  drawn,  and  out  of  which  he 
had  a  legal  right  to  have  it  paid,  or,  in  other  words,  if  the  bank 
was  not  at  the  time  indebted  to  the  drawer  for  money  deposited, 
whereby  he  had  the  right  to  expect  the  bank  to  pay  the  check  and 
charge  it  to  him  as  against  such  deposit  account,  then  the  payee 
was  relieved  from  making  a  demand ;  and  this  cannot  be  clianged 
l)y  a  willingness  on  the  part  of  the  bank  to  pay  the  check  of  the 
drawer,  notwithstanding  he  may  have  no  funds  on  deposit.  The 
payee  took  the  check  with  the  legal  obligation  resting  upon  him 
to  present  the  check  at  the  bank  for  payment,  and  if  he  failed  to 
do  80,  and  the  drawer  had  funds  in  the  bank  to  pay  it,  and  loss 
ensued  by  reason  of  such  failure,  the  payee  suffers  the  loss;  but, 
if  the  drawer  had  no  funds  in  the  bank  for  the  payment  of  the 
check,  the  payee  is  excused  from  presenting  the  cheek  for  payment. 
If  the  drawer  has  no  funds  in  the  bank  at  the  time  for  present- 
ment for  payment,  there  is  no  legal  obligation  resting  upon  the 
payee  to  present  it  for  jiayraent.  The  bank  had  no  legal  right  to 
permit  the  drawer  to  overdraw  and  pay  his  clieckoutof  the  funds 
of  other  depositors,  or  the  money  of  the  stockholders. 

The  next  question  for  consi(leration  is  the  exception  of  the 
appellant  to  the  ruling  of  the  court  to  the  admission  in  evidence 
of  the  entries  in  the  books  of  the  First  National  Bank,  made  in 
the  usual  course  of  business,  showing  the  state  of  the  account 
of  said  Moses  C.  Culver  at  and  subsequent  to  the  execution  of 
the  checks  sued  upon.  As  preliminary  to  the  introduction  of  the 
entries  in  these  books  in  evidence,  it  was  shown  by  the  clerks  and 
officers  of  the  bank,  produced  in  court  as  witnesses,  and  as  to  the 
entries  made  by  such  witnesses,  that  they  were  at  the  time  the 
entries  were  made  the  proper  and  authorized  book-keepers  to 
make  such  entries ;  that  the  entries  were  made  by  them  in  the 
due  course  of  business,  in  the  discharge  of  their  duties,  and  were 
correct  when  made  ;  that  the  entries  made  by  them  were  original 
and  entered  by  them  in  books  kept  for  that  purpose;  and  that 
they  had  no  recollection  of  the  facts  represented  by  the  entries. 
As  to  the  entries  made  by  parties  who  were  not  witnesses,  it  was 

•_'.;  401 


ILL.  CAS.       EXCUSES  FOR  NON-PRESENTMENT,  ETC.     [CH.  XIII. 

shown  that  the  enterer  was  at  the  time  the  entry  was  made  the 
proper  book-keeper  and  agent  of  the  bank  to  make  the  entries  in 
the  due  course  of  business ;  that  the  entries  were  original  entries, 
in  original  books,  made  by  such  book-keepers,  in  due  course  of 
business,  and  were  in  the  known  handwriting  of  such  book- 
keepers ;  and  that  the  enterer  was  dead  or  a  non-resident  of  the 
State  of  Indiana,  After  the  making  of  such  preliminary  proof, 
the  entries  weie  admitted  in  evidence,  over  the  objection  of  the 
appellant.  It  was  proper  to  prove  in  tbis  case  the  state  of  Moses 
C.  Culver's  account  with  the  bank  upon  which  he  drew  the  cliecks, 
at  the  time  he  drew  them,  and  subsequent  thereto,  under  the 
issues  in  the  case.  And  it  is  pertinent  to  the  question  to  consider 
how  such  facts  could  be  proven,  if  the  evidence  introduced 
was  not  admissible  or  competent  for  that  purpose.  The  bank 
with  which  he  did  business,  and  upon  which  he  drew  the  check, 
kept  books  and  made  an  entry  of  all  their  business,  — of  the  money 
deposited  by  Culver,  and  checks  drawn  by  him  and  paid  by  the 
bank.  The  books  were  kept  by  disinterested  parties.  Some  of 
the  persons  who  at  the  time  of  the  transaction  kept  the  books  took 
the  deposit  and  placed  it  to  Culver's  credit,  paid  the  checks 
drawn  by  him,  and  entered  them  on  the  books,  or  charged  them 
to  his  account,  were  dead.  Others  were  beyond  the  jurisdiction 
of  the  court,  and  others  had  no  personal  recollection  of  the  trans- 
action, except  to  know  that  the  books  were  kept  in  due  course  of 
the  banking  business,  and  were  correct,  and  showed  a  correct 
statement  of  the  account.  Unless  the  evidence  admitted  was 
competent,  the  appellee  is  deprived  of  making  proof  of  the  facts. 
Price  V.  Torrington,  1  Smith  Lead.  Cas.  (9th  Ed.)  566,  was 
an  action  for  beer  sold  and  delivered.  It  was  held  that  a  book 
containing  an  account  of  the  beer  deUvered  by  the  plaintiff's 
drayman,  and  which  it  was  the  duty  of  the  drayman  to  sign  daily, 
was  competent  to  prove  the  delivery,  on  proof  that  the  drayman 
was  dead,  and  of  his  handwriting.  In  a  note  to  this  case  it  is 
said:  "A  party's  own  books  of  account  and  original  entries  are 
now,  in  most,  if  not  all,  of  the  United  States  received  as  evidence 
of  a  sale  and  delivery  of  goods  to,  or  of  work  done  for,  the  adverse 
party."  On  the  same  subject  it  is  further  said:  "  The  reason  for 
its  introduction  hasneverbeen  placed  by  any  court  on  higher  ground 
than  that  of  necessity  ;  for,  in  view  of  the  number  and  frequency 
of  transactions  of  which  entries  are  daily  required  to  be  made, 
the  difficulty  and  inconvenience  of  making  formal  common-law 
proof  of  each  item  would  be  very  great.  To  insist  upon  it, 
therefore,  would  either  render  a  credit  system  impossible,  or 
leave  the  creditor  remediless."  In  1  Greenl.  Ev.  (14th  Ed.), 
§  115,  it  is  said:  "It  is  upon  the  same  ground  that  certain 
entries  made  by  third  persons  are  treated  as  original  evidence. 
Entries  by  third  persons  are  divisible  into  two  classes:  First, 
those  which  are  made  in  the  discharge  of  official  duty  and  in  the 
course  of  professional  employment;  and,  secondly,  mere  private 
entries.     Of  these  latter  we  shall  hereafter  speak.     In  regard  to 

402 


ni.  XIII.]     EXCUSES  FOU  NON-PRESENTMENT,  ETC.       ILL.  CAS. 

the  former  class,* the  entry,  to  be  admissil)le,  must  be  one  which 
it  was  the  person's  duty  to  make,  or  which  belonged  to  the  trans- 
action as  part  thereof,  or  which  was  its  usual  and  proper  concom- 
itant." In  1  Whart.  Ev.  (3  Ed.),  §  238,  it  is  said:  "An 
accountant  or  other  lousiness  agent  may  be  regarded  as  a  mem- 
ber of  a  well-adjusted  business  machine,  noting  in  the  proper 
time  and  in  the  proper  way  what  it  is  bis  duty  to  upte.  If  he 
has  no  personal  motive  to  sweive  him,  the  inference  is  that 
what  be  does  in  this  way  he  does  accurately ;  and  his  evi- 
dence, if  there  be  nothing  to  impeach  it,  rises  in  authority 
precisely  to  the  extent  to  which  he  is  to  be  regarded  as  a 
mechanical  and  self-forgetting  register  of  the  events  which 
his  accounts  are  offered  to  prove.  Hence  it  is  that  the  mem- 
oranda or  book  entries  of  an  officer,  agent,  or  business  man, 
when  in  the  course  of  his  duties,  become  evidence  after  his  de- 
cease, or  after  he  has  passed  out  of  the  range  of  process,  or  he- 
come  incompetent  to  testify  of  the  truth  of  such  entries ;  sub- 
ject, however,  to  be  excluded,  if  it  appears  that  in  making  the 
entries  he  was  not  registering,  but  manufacturing,  current  facts." 
The  rule,  as  stated  by  Greenleaf  and  Wharton,  is  well  supported 
by  authorities.  Sickles  v.  Mather,  20  Wend.  70.  In  Tiie  Faxon 
V.  HoUis,  13  Mass.  427,  the  book  of  a  blacksmith,  kept  in  ledger 
form,  the  items  being  fiist  noted  down  on  a  slate  and  then 
entered  in  the  book,  was  held  to  be  competent  evidence.  Rey- 
nolds V.  Manning,  15  Md.  510  ;  Kelsea  v.  Fletcher,  48  N.  H.  282  ; 
Coolidge -y.  Brigham,  5  Mete.  68;  New  Haven  Co.  v.  Goodwin, 
42  Conn.  230.  In  Alter  v.  Berghaus,  8  Watts,  77,  it  is  held  that 
the  absence  of  a  witness  from  the  State,  so  far  as  it  effects  the 
admissibility  of  secondary  evidence,  has  the  same  effect  as  his 
death.  This  was  in  relation  to  the  admission  in  evidence  of 
original  entries  in  books  made  by  such  absent  pi-rson.  We  think 
the  evidence  is  clearly  admissible,  but  we  might  add  that,  as 
regards  the  books  kept  by  bookkeepers  and  officers  of  National 
Banks,  by  section  5209,  Rev.  St.  U.  S.,  it  is  made  a  penal  offense 
to  make  a  false  entry  in  any  such  books ;  so  that  these  entries 
were  not  only  made  as  original  entries  in  the  due  course  of  busi- 
ness, but  the  persons  making  them  were  liable  to  criminal  pros- 
ecution, and,  upon  conviction,  to  suffer  imprisonment,  if  they 
made  a  false  entry. 

A  book-keeper  for  tlie  bank  made  out  a  statement  of  all  the 
items  of  Culver's  account  appearing  in  the  books  of  the  bank,  and 
ap[)eared  and  was  sworn  as  a  witness,  and  stated  that  he  had  pre- 
pared such  statement,  and  had  it  with  him,  and  with  the  books 
before  him  was  interrogated  as  to  what  items  appeared  in  the 
account.  Tlie  court  permitted  such  statement  so  made  out  and 
testified  to  by  the  witness  in  evidence,  and  allowed  the  same  to" 
lie  read  to  tiie  jury,  over  the  objection  and  exrcptions  of  tl:i- 
appellant,  and  this  ruling  of  the  court  is  C(jmplaini'd  of  as  an 
error.  This  was  a  long  statement  of  accounts,  and  the  witness 
who  made  out  the  statement  was  subject  to  cross-examinatiou. 

403 


ILL.  CAS.       EXCUSES  FOIl  NON-PRKSENTMENT,  ETC.      [CH.  XIII. 

The  appellant  had  an  opportunity  to  test  its  correctness,  and 
cross-examine  the  witness  who  made  out  the  statement.  The 
appellant  had  as  full  and  complete  an  opportunity  to  discover  any 
error  in  the  statement  made  by  the  witness  as  if  he  had  appeared 
as  a  witness  and  testified  from  the  books  without  making  any 
written  statements.  When  the  entries  in  books  are  numerous 
and  comp^cated,  it  is  competent  to  permit  an  expert  book-keeper, 
who  has  examined  the  books,  to  give  a  summary  oral  statement 
of  their  contents  and  computations  made.  See  The  Work  of  the 
Advocate,  by  Elliott,  page  217,  and  authorities  there  cited.  See, 
also,  Von  Sachs  v.  Kretz,  72  N.  Y.  548 ;  McCormick  v.  Railroad  Co. , 
49  N.  Y.  315  ;  Howard  v.  McDonough,  77  N.  Y.  593.  We  see  no 
reason  why,  when  huch  expert  witness  who  has  examined  the  books 
and  made  an  abstract  of  them,  testifies  as  a  witness,  and  oppor- 
tunity is  given  for  cross-examination  in  regard  to  such  statement, 
as  in  this  case,  the  statement  may  not  be  admitted  in  evidence 
and  read  to  the  jury.  We  think  the  abstract  of  the  books  was 
properly  admitted,  but  the  original  entries  made  in  the  books 
were  also  in  evidence  in  this  case,  and  no  complaint  is  made  that 
the  statement  did  not  correspond  with  the  books,  and,  whether 
properly  admitted  or  not,  no  harm  could  have  resulted  to  the  ap- 
pellant by  reason  of  the  admission  of  such  statement,  and  there- 
fore no  reason  exists  for  the  reversal  of  the  case.  Bank  v.  Adams, 
91  Ind.  286  ;  Hays  v.  Morgan,  87  Ind.  231-236.  There  is  a  fur- 
ther question  as  to  the  same  ruling  of  the  court  in  refusing  to 
allow  the  appellant  to  ask  one  Spencer  a  cross-examining  ques- 
tion. We  have  considered  this,  and  there  was  no  error.  There 
is  no  error  in  the  record  for  which  the  judgment  should  be  re- 
versed.    Judgment  affirmed,  with  costs. 


Sufficiency  of  Notice  of  Dishonor  —  Promise  to  Pay  After 
Dishonor  Constitutes  a  Waiver. 

Hobbs  V.  Straine,  149  Mass.  212  (21  N.  E.  3C5). 

Morton,  C.  J.  Notice  of  the  dishonor  of  a  note  is  sufficient 
to  charge  an  indorser,  if  it  is  delivered  to  him  pei-sonally,  or  is 
left  at  his  place  of  residence  or  of  business,  or  is  deposited  in  the 
mail,  addressed  to  him  at  his  place  of  residence  or  of  business, 
ilie  postage  being  prepaid.  Pub.  St.  c.  77,  §  16;  Bank  v.  Shaw, 
144  Mass.  421;  11  N.  E.  Rep.  666;  Bank  v.  Shaw,  142  Mass. 
290 ;  7  N.  E.  Rep.  779.  The  underlying  principle  of  all  the  de- 
lisions  upon  the  subject  is  that  reasonable  diligence  must  be 
used  by  the  holder  in  getting  notice  of  the  dishonor  to  the 
indorser.  In  the  case  at  bar  the  evidence  tended  to  show  that 
the  plaintiff  in  due  time  sent  a  written  notice  of  the  dishonor, 
addressed  to  the  defendant,  to  his  office,  which  was  his  place  of 
business,  and,  finding  no  one  in,  left  it  there.  The  precise  place 
in  the  office  where  it  was  left  was  not  fixed  with  certainty,  and 

404 


CH.XIII.]     EXCUSES  FOR  NON-PKESENTMENT,  ETC.       ILL.  CAS. 

the  court  instructed  the  jury  that,  if  they  found  that  it  was  left 
in  a  consi)icuOus  place  in  the  oflSce,  it  was  a  suflicient  notice. 
This  ruling  was  correct.  The  jury  might  well  find  that  the 
notice  was  left  in  good  faith  in  the  tlefeudant's  office  in  such  way 
that  he  would  be  likely  to  see  it  when  he  came  in.  Such  a  mode 
of  giving  the  notice  would  ordinarily  be  as  effectual  as  if  it  were 
sent  by  mail,  through  a  letter  carrier.  We  think  the  evidene(> 
shows  a  compliance  with  the  rule  of  law  requiring  the  hokkr  to 
exercise  reasonable  diligence,  and  that  the  notice  was  sufficient  to 
charge  the  defendant  as  iudorser. 

There  being  conflicting  evidence  as  to  the  sufficiency  of  the 
notice,  the  plaintiff  at  the  trial  relied  upon  a  waiver  by  the 
defendant  of  any  defect  in  the  notice,  and  introduced  evidence 
tending  to  show  that  after  the  note  matured  the  defendant  prom- 
ised to  pay  ;  he  testifying  that  at  the  time  of  the  alleged  promise 
he  knew  that  he  was  released  from  liability  on  account  of  the 
failure  to  receive  notice.  This  was  evidence  of  a  waiver,  and  the 
instruction  of  the  court  to  the  jury  that  "  if  the  d^^fendant,  know- 
ing all  the  facts  which  released  him  from  liability,  and  knowing 
or  believing  himself  to  be  discharged  from  liability  as  indorser, 
promised  to  pay  the  note,  they  would  be  warranted  in  finding  for 
the  plaintiff,"  was  sufficiently  favorable  to  the  defendant.  Bank 
V.  Ashworth,  105  Mass.  603 ;  Rindge  v.  Kimball,  124  Mass.  209, 
Exceptions  overruled. 

405 


CHAPTER  XIV. 

FORGERY  AND  ALTERATION  OF  BILLS  AND  NOTES. 

Section  149.  Forgery  defined  and  explained. 

150.  Forgery,  alteration  and  spoliation  distinguished. 

151.  The  effect  of  authorized  alterations. 

152.  Presumption  as  to  time  of  alteration  and  burden  of  proof. 

153.  What  are  material  alterations. 

154.  What  are  immaterial,  alterations. 

155.  Rights  of  bona  fide  holder  of  forged  or  altered  bill  or  note. 

156.  Recovery  of  money  paid  on  a  forged  bill  or  note. 

§  149.  Forgery  defined  and  explained.— Forgery  may 
be  defined  as  "  the  act  of  falsely  niakiuor  or  materially 
altering,  with  intent  to  defraud,  any  writing,  which,  if 
genuine,  might  be  of  legal  efficacy,  or  the  foundation  of  a 
legal  liability"  (Standard  Dictionary).  Although  the  more 
common  kind  of  forgery  is  the  signing  of  one's  name  to  a 
legal  instrument,  that  is  otherwise  genuine,  or  the  complete 
execution  of  such  an  instrument  in  another's  name,  includ- 
ing the  signature;  it  is  just  as  much  a  forgery,  if  one 
should  write  over  the  genuine  signature  of  another  what  he 
was  not  authorized  to  write,  and  representing  fraudulently 
a  liability  as  a  party  to  a  bill  or  other  legal  instrument 
which  does  not  exist.  It  is  pronounced  to  be  a  forgery 
even  where  a  fraudulent  representation  is  made  as  to  the 
personality  of  the  individual,  who  has  executed  the  bill  or 
note;  as  where  two  people  bear  the  same  name,  and  the 
instrument  is  executed  by  one,  and  it  is  transferred  under  a 
misrepresentation  that  it  was  executed  by  the  other  person 
of  the  same  name.^  The  signature  of  a  fictitious  name, 
where  it  is  made  with  intent  to  defraud,  has  been  held  to 
be  a  forgery.^ 

1  Com.  V.  Foster,  114  Mass.  311  (19  Am.  Rep.  353). 

2  Schultz  V.  Astley,  2  Bing.  N.  C.  544;  Rex  v.  Ballard,  1  Leach,  97; 
United  States  v.  Turner,  7  Ptt.  132;  Brown  v.  People,  8  Hun,  562;  ex 
parte  Hibbs,  26  Fed.  Rep.  421;  State  v.  Givens,  5  Ala.  747;  Com.  v. 
Costello,  120  Mass.  358. 

406 


Cir.  XIV.]  FOKGEKY    AND    ALTERATION.  §150 

§  150.  Forgery,  alteration  and  spoliation  distin- 
guished.—  The  intent  to  defraud  is  an  essential  element 
of  forgery  ;  and  where  an  otherwise  genuine  bill  or  note 
has  been  altered  in  any  of  its  material  parts,  with  intent  to 
defraud,  it  is  just  as  much  forgery,  as  if  the  original  instru- 
ment had  been  a  counterfeit.^  And  these  fraudulent 
alterations  not  only  avoid  the  bill  or  note  itself,  but  they 
also  extinguish  the  debt  or  obligation,  which  constitutes 
the  consideration  of  the  instrument."'  But  while  an 
innocent  alteration,  if  material,  will  avoid  a  bill  or  note, 
the  action  on  the  original  consideration  can  nevertheless  be 
maintained.  This  is  at  least  the  trend  of  judicial  opinion.^ 
It  is,  however,  true  that,  as  long  as  no  one  has  suffered 
any  material  injury  from  an  innocent  alteration,  a  court 
of  equity  jurisdiction  has  the  power  to  decree  a  restoration 
of  the  instrument  to  its  oriojinal  condition,  and  reinstate 
the  parties  to  their  original  rights  under  it.  But  the  court 
will  never  interfere,  where  the  alteration  was  fraudulent.* 
An  innocent  immaterial  alteration  has  no  practical  eflect 

»  Wheelock  v.  Freeman,  13  Pick.  1G5  (23  Am.  Dec.  674);  Belknap  v. 
National  Bank  of  N.  A.,  100  Mass.  S7G  (97  Am.  Dec.  105);  Hamilton  v. 
Hooper,  46  Iowa,  515  (26  Am.  Rep.  161);  Burwell  v.  Orr,  84  HI.  465; 
White  V.  Continental  Nat.  Bank,  64  N.  Y.  316  (21  Am.  Rep.  612). 

2  Wheelock  v.  Freeman,  13  Pick.  1G5  (23  Am.  D(C,  674);  Meyer  v. 
Hunecke,  55  N.  Y.  412;  Booth  v.  Power.s,  56  N.  Y.  22;  Flanagan  v.  Nat. 
Bk.  of  Dover,  2  N.  Y.  S.  488;  18  N.  Y.  St.  Rep.  826;  Gettysburg  N.  Bk.  v. 
Chisolra,  169  Pa.  St.  564  (32  A.  730);  Hurlbnt  v.  Hall,  39  Neb.  889  (58  N. 
W.  538);  Ballard  v.  Franklin  Ins.  Co.,  81  Ind.  239;  Merrick  v.  Boury,  4 
Ohio  St.  70;  Cog;?ins  v.  Stockard,  64  Mis.'^.  301  (1  So.  245);  Middaugh 
V.  Eliott,  1  Mo.  App.  4(;2. 

3  A'kinson  v.  Hawden,  2  Ad.  &  El.  628;  Angle  v.  N.  W.  etc.  Ins.  Co., 
92  U.  S.  342;  Meyer  v.  Hunecke,  55  N.  Y.  412;  Booth  v.  Powers,  56  N.  Y. 
22;  Hunt  v.  Gray,  Jr  ,  35  N.  J.  L.  227  (10  Am.  Rep.  232);  Harsh  v. 
Klepper,  28  Ohio  St.  200;  Vogle  v.  Ripper,  34  111.  100  (85  Am.  Dec.  298)  ; 
Clough  V.  Seay,  49  Iowa,  111;  Sullivan  v.  Rudisill,  63  Iowa,  158;  Matte- 
fion  V.  Ellsworth,  33  Wis.  488  (14  Am.  Rep.  766;  Moore  v.  Hutchinson, 
09  Mo.  429;  State  Sav.  Bk.  v.  Shaffer,  9  Neb.  1  (;U  Am.  Rep.  394).  But 
t've  Bigelow  v.  Stili>hen,  35  Vt.  521;  Toomer  v.  KuMand,  57  Ala.  379 
(29  Am.  Rep.  722). 

■•  Chad  wick  v.  Eastman,  53  Me.  10;  Citizens  Nat.  Bk.  v.  Richmond,  121 
Mass.  110;  Kouniz  v.  Kennedy,  63  Pa.  St.  187  (3  Am.  Rep.  641);  Horst 
V.  Wagner,  43  Iowa,  373  (22  Am.  Rep.  255). 

407 


§  151  FORGERY  AND  ALTERATION.       [CH.  XIV. 

whatever  on  the  bill  or  note.  But  it  has  been  held,^  and 
likewise  denied  ^  that  an  immaterial  fraudulent  alteration 
will  avoid  it. 

Where  an  alteration  is  made  in  the  contents  of  a  bill  or 
note  by  a  stranger  without  the  consent  or  procurement  of 
any  party  thereto,  it  is  called  a  spoliation.  And  in  the 
United  States,  it  is  held  to  have  no  effect  on  the  liability 
of  the  parties,  as  long  as  the  original  terms  of  the  instru- 
ment can  be  deciphered,  with  reasonable  certainty.^ 

§  151.  The  effect  of  autliorized   alterations. —  If  the 

alteration  is  made  with  the  consent  of  the  parties  to  a  bill 
or  note,  it  has  the  effect  of  making  a  new  contract  as  a 
substitute  for  the  original.  If  the  consent  of  all  the  partiesis 
obtained,  all  of  them  are,  of  course,  bound  by  the  new  con- 
tract; but  if  the  alteration  is  made  with  the  approbation  of 
only  a  part  of  them,  those  consenting  will  be  bound,  while 
the  others  will  be  discharged  from  all  liability.^ 

The  consent  to  the  alteration  need  not  precede  its  execu- 
tion. It  may  be  ratified  subsequently  by  a  recognition  of 
the  altered  bill  or  note.  If,  however,  the  act  of  recogni- 
tion is  done  without  knowledge   of  the  alteration,  it  will 

1  Lubbering  v.  Kohlbrecher,  22  Mo.  598;  Kingston  Sav.  Bk.  v.  Bosser- 
man,  52  Mo.  App.  269.  See  Craighead  v.  McLoney,  99  Pa.  St.  211; 
Johnston  v.  May,  76  Ind.  293. 

2  Moge  V.  Herndon,  30  Miss.  110;  Mt.  Morris  Bk.  v.  Lawson,  27  N.  Y. 
S.  272;  Reed  v.  Roark,  14  Tex.  329  (C5  Am.  Dec.  127);  Humphreys  v. 
Crane,  5  Cal.  173. 

3  Ford  V.  Ford,  17  Pick.  418;  Drum  v.  Drum,  133  Mass.  566;  Colson  v. 
Arnot,  57  N.  Y.  253  (15  Am.  Rep.  496;  ;  Bigelow  v.  Stilphen,  35  Vt.  521; 
Ballard  v.  Franklin  Ins.  Co.,  81  Ind.  239;  Lee  v.  Alexander,  9  B.  Mon.  25 
(48  Am.  Dec.  412);  Union  Bk,  v.  Roberts,  45  "Wis.  373;  Lubbering  v. 
Kohlbrecher,  22  Mo.  596;  Vogle  v.  Ripper,  34  111.  100  (85  Am.  Dec.  298) ; 
Hamilton  v.  Hooper,  46  Iowa,  515  (26  Am.  Rep.  161). 

4  Warring  v.  Williams,  8  Pick.  322;  Bailey  v.  Taylor,  11  Conn.  531  (29 
Am.  Dec.  321);  Stahl  v.  Berger,  10  Serg.  &  R.  170  (13  Am.  Dec.  666); 
Myers  v.  Nell,  84  Pa.  St.  369;  Taddikeu  v.  Cantrell,  69  N.  Y.  597  (25  Am. 
Rep.  253);  Bk.  of  Ghio  Valley  v.  Lockwood,  13  W.  Va.  392  (31  Am.  Rep. 
768);  Morrison  v.  Smith,  13  Mo.  234  (53  Am.  Dec.  145);  Overton  v. 
Mathews  35  Ark.  146  (37  Am.  Rep.  9);  Stewart  v.  First  Nat.  Bank,  40 
Mich.  348;  Grimstead  v.  Briggs,  4  Iowa,  559. 

408 


CH.  XIV. J       FOUGERY  AND  ALTERATION.  §  153 

operate  as  an  estoppel,  to  bind  the  party  acting,  only  to  a 
bona  fide  holder.^ 

§  152.  Resumption  as  to  time  of  alteration  and  bur- 
den of  proof. —  Where  the  alteration  is  so  well  done  that 
it  is  not  readily  recognized  by  an  examination  of  the  paper, 
the  burden  of  proof  is  on  the  party  alleging  the  alteration ; 
and  it  is  presumed  that  the  alteration  was  made  contem- 
poraneously with  the  execution  of  the  bill  or  note.^  Some 
of  the  cases  hold  that  the  alteration  is  presumed  to  have 
been  made  at  the  time  of  execution  of  the  instrument, 
whether  it  is  apparent  or  concealed,  throwing  the  burden 
of  proof  in  every  case  on  the  defendant.'^  Other  cases 
maintain  that,  where  the  alteration  is  apparent,  the  burden 
is  on  the  plaintiff  to  prove  that  it  was  made  prior  to  nego- 
tiation of  the  bill  or  note,  or  that  it  was  made  with  the 
consent  of  the  parties,  if  made  subsequently.* 

§  153.  What  are  material  alterations. —  Any  alteration 
is  material  which  changes  the  liability  of  the  parties  in  any 
way;  and  the  alteration  will  avoid  the  bill  or  note,  whether 
it  is  favorable  or  unfavorable  to  the  party  making  it;  on 
the  ground  that  any  change  in  the  terms  of  the  instrument 
affects  its  identity. 

•  Humphreys  v.  Guillow,  13  N.  11.  385  (38  Am.  Dec.  499) ;  Wood- 
worth  V.  Bank  of  America,  IG  Johns.  391  OO  Am.  Dec.  239);  Clute  v. 
Small,  17  Wend.  238;  Wellington  v.  Jackson,  121  Mass.  157;  Fraker  v. 
CuUom,  21  Kan.  555;  Evans  v.  Foreman,  60  Mo.  449;  Bell  v.  Machin,  69 
Iowa,  408;  Goodspeed  v.  Cutler,  75  111.  534. 

"  Meikel  v.  State  Sav.  Bk.,  36  Ind.  355;  United  States  v.  Linn,  1  How. 
104;  Odell  r.  Gallup,  62  Iowa  253  (17  N.  W.502);  Lowman  v.  Auberry, 
72  111.  619. 

3  Dodge  V.  Haskell,  69  Me.  429;  Davis  v.  Jenney,  I  Met.  221;  Bailey 
V.  Taylor,  11  Conn.  531  (29  Am.  Dec.  321);  Cochran  v.  Nebeker,  48  lud. 
4G0;  Pararaore  v.  Liudsey,  63  Mo.  63;  Wilson  v.  Harris,  35  Iowa,  507; 
Corcoran  v.  Doll,  32  Cal.  82.     See  Hayden  v.  Goodnow,  39  Conn.  164. 

<  Wilde  V.  Armsby,  6  Cush.  314;  Ely  v.  Ely,  G  Gray  439;  Simpson  v. 
Stockhouse,  9  Pa.  St.  186  (49  Am.  Dec.  554) ;  Long  v.  Mason,  84  N.  C. 
15;  Willetr.  Shepard,  34  Mich.  106;  White  v.  Haas,  32  Ala.  430  (70  Am. 
Dec.  548);  Page  v.  Danaher,  43  Wis.  221;  Walters  v.  Short,  10  111.  252. 
See  Nell  v.  Case,  25  Kan.  510  (37  Am.  Rep.  259),  for  a  full  discussion 
of  the  contradictory  opinions  of  the  courts  on  this  question. 

409 


§  153  FORGERY  AXD  ALTERATION.       [CH.  XIV. 

The  following  have  been  held  to  be  material  alterations: 
1.  Any  change  in  the  date  of  the  instrument.^  2.  Any 
change  in  the  time  of  payment. ^  3.  In  the  amount  of  prin- 
cipal or  rate  of  interest;^  or  in  the  medium  of  payment,  as 
whether  payable  in  gold  or  generally.*  4.  Any  alteration 
ill  the  personality,  number  and  relations  of  the  parties  to  the 
bill  or  note,  to  the  detriment  of  any  of  the  parties  thereto.** 
5.  Any  change  whatsoever  in  the  liability  of  the  parties, 
by  the  erasure  or  addition  of  words;  as,  for  example,  tbe 

1  Wood  V.  Steele,  6  Wall.  80;  Crawford  v.  West  Side  Bank,  100  N.  Y. 
50  (2  N.  E.  881;  53  Am.  Rep.  152)  ;  Stephens  v.  Graham,  7  Serg.  &  R.  505 
(10  Am.  Dec.  485);  Newman  v.  King,  54  Ohio  St.  273  (43  N.  E.  683); 
Benedict  v.  Miner,  58  111.  19;  Wyman  v.  Yeomans,  84  111.  403;  Britton  v. 
Dierker,  46  Mo.  591  (2  Am.  Rep.  553) ;  Overton  v.  Mathews,  35  Ark.  146 
(37  Am.  Rep.  9) ;  Brown  v.  Straw,  6  Neb.  536  (29  Am.  Rep.  369).  But  it 
is  held  not  to  be  a  material  alteration  to  change  the  date  of  an  indorse- 
ment.    Griffith  V.  Cox,  I  Overt.  210. 

2  Hervey  v.  Harvey,  15  Me.  357;  Ives  v.  Farmers'  Bank,  2  Allen  236; 
Stayner  v.  Joice,  82  Ind.  35;  Lester  v.  Rogers,  18  B.  Mon.  537;  Bay  v. 
Shrader,  50  Miss.  326;  King  v.  Hunt,  13  Mo.  97;  Benjamin  v.  Delahay,  9 
111.  536. 

3  McGrath  v.  Clark,  56  N.  Y.  34  (15  Am.  Rep.  372);  Schwartz  v.  Op- 
pold,  74  N.  Y.  307;  Fay  v.  Smith,  1  Allen,  477  (79  Am.  Dec.752)  ;  Draper 
V.  Wood,  112  Mass.  315  (17  Am.  Rep.  92) ;  Craighead  v.  McLoney,  99  Pa. 
St.  211;  Gettysburg  N.  Bk.  v.  Chisolm,  169  Pa.  St.  564  (32  A.  730);  Derr 
V.  Keough  (Iowa),  65  N.  W.  339;  Franklin  L.  Ins.  Co.  v.  Courtney,  60 
Ind.  134;  Aetna  Bk.  v.  Winchester,  43  Conn.  391 ;  Farmers'  &  M.  N.  Bk. 
V.  Novich  (Tex.),  34  S.  W.  914;  Kilkelly  v.  Martin,  34  Wis.  525;  Little 
Rock  Trust  Co.  v.  Martin,  57  Ark.  277  (21  S.  W.  468) ;  Iron  Mountain 
Bank  v.  Murdock,  62  Mo.  70 ;  Hurlbut  v.  Hall,  39  Neb.  889  (58  N.  W.  538) . 

*  Angle  V.  N.  W.  &c.  Ins.  Co.,  92  U.  S.  .S30;  Church  v.  Howard,  17 
Hun  5;  Darwin  v.  Ripley,  63  N.  C.  318;  Bogarth  v.  Breedlove,  39  Tex. 
561.  But  see  Bridges  v.  Winters,  42  Miss.  135  (97  Am.  Dec.  443;  2  Am. 
Rep.  598). 

5  Mouson  V.  Drakely,  40  Conn.  552  (16  Am.  Rep.  74) ;  Howe  v.  Tag- 
gart,  133  Mass.  284;  Stoddard  v.  Penniman,  108  Mass.  366  (11  Am.  Rep. 
363);  York  v.  Jones,  14  Vroom  (42  N.  J.  L.),  332;  Bank  of  Commerce  v. 
Union  Bank,  3  N.  Y.  230;  Smith  v.  Weld,  2  Pa.  St.  54;  Banington  v.  Bk. 
of  Washington,  14  Serg.  &  R.  405;  Hamilton  v.  Hooper,  46  Iowa,  515  (26 
Am.  Rep.  161);  Nicholson  v.  Combs,  90  Ind.  515  (46  Am.  Rep,  229);  Wal- 
lace V.  Jewell,  21  Ohio  St.  163  (8  Am.  Rep.  48);  Gillett  v.  Sweat,  6  111. 
475;  Burlingame  v.  Brewster,  79  111.  515  (22  Am.  Rep.  177);  Morrison  v. 
Garth,  78  Mo.  434;  Harper  v.  Stroud,  41  Tex.  C36;  Haskell  v.  Champion, 
30  Mo.  136.  But  see  Brownell  v.  Winnie,  29  N.  Y.  400  (86  Am.  Dec.  314)  ; 
Favorite  v.  Stidham,  84  Ind,  423. 
410 


CH,  XIV.]  FORGEKY    AND    ALTERATION.  §    154 

insertion  of  words  of  negotiability  in  the  body  of  the  bill 
or  note.^  6.  Alteration  in  the  place  of  payment,  either  in 
inserting,  changing  or  erasing  a  specific  place  of  payment. ^ 
In  the  N.  Y.  Negotiable  Instruments  Law,  1897,  §  206, 
a  material  alteration  is  declared  to  be  any  alteration  which 
changes,  1,  the  date  ;  2,  the  sum  payable,  either  for  prin- 
cipal or  interest;  3,  the  time  or  place  of  payment  ;  4,  the 
number  or  the  relations  of  the  parties  ;  5,  the  medium  or 
currency  in  which  payment  is  to  be  made.  Or  which  adds 
a  place  of  payment  where  no  place  of  payment  is  specified, 
or  any  other  change  or  addition  which  alters  the  effect  of 
the  instrument  in  any  respect. 

§  154.  What  are  immaterial  alterations?  —  An  altera- 
tion is  immaterial,  wiienever  it  does  not  change  the  legal 
effect  of  the  instrument,  as  wliere  words  are  added  which 
are  implied  by  law,  or  where  words  of  no  legal  importance 
are  stricken  out  or  added.  A  few  examples  will  be  given 
for  the  purposes  of  illustration. 

1  Granite  Ry.  Co.  v.  Bacon,  15  Pick.  239;  Belknap  v.  Nat.  Bk.  of  N. 
A.,  100  Mass.  376  (07  Am.  Doc.  105);  Booth  v.  Powers,  56  N.  Y.  22; 
McCauley  v.  Gordon,  64  Ga.  221  (37  Am.  Rep.  68);  Johnson  r.  Bank  of 
U.  S.,  2  B.  Mon.  310;  Weaver  v.  Bromley,  65  Mich.  212  (31  N.  W.  830); 
Brown  v.  Straw,  6  Neb.  536  (20  Am.  Rep.  369) ;  Union  Nat  Bk.  r.  Rob- 
erts, 45  Wis.  373;  Croskcy  v.  Skinner,  44  III.  321  (erasure  of  a  jiuuranty). 
Ilemmcnway  v.  Stone,  7  Mass.  58  (5  Am.  Dec.  27);  Reevt  s  t\  Pierson, 
23  Hun  185  (statement  of  consideration) ;  Woodworth  v.  Bank  of  Amer- 
ica, 16  Johns.  301  (10  Ara.  Dec.  230)  addition  or  erasure  of  memoranda) ; 
Benedict  v.  Cowden,  49  N.  Y.  396  (10  Am.  Rep.  382)  (ditto);  Wait  v. 
Poraeroy,  20  Mich.  425  (4  Am.  Rep.  395)  (ditto). 

2  Nazro  v.  Fuller,  24  Wend.  374;  Southwark  Bink  v.  Gross,  35  Pa.  St. 
80;  Bank  of  Ohio  Valley  v.  Lockwood,  13  W.  Va.302  (31  Am.  Rep.  768); 
White  V.  Hass,  32  Ala.  430  (70  Am.  Dec.  548);  McCoy  r.  Lockwood,  71 
Ind.  319;  Townscnd  v.  Star  Wafrou  Co.,  10  Neb.  615  (35  Am.  Rep.  403); 
Adair  v.  E-jland,  58  Iowa,  314  (12  N.  W.  277).  But  see  Am.  Nat.  Bk.  v. 
Bangs,  42  Mo.  450  (07  Am.  Dec.  340). 

It  must  be  remembered,  however,  in  this  connection,  that  the  dr.iwee, 
In  accepting  a  bill,  has  the  right  to  stipulate  a  specific  place  of  piyment 
in  the  same  city  or  town,  where  none  has  been  provided  for  by  the 
drawer.  Myers  v.  Standart,  11  Ohio  St.  29;  Troy  City  Bk.  r.  Lanman, 
19  N.  Y.  477.  In  the  latter  case,  the  drawee  is  held  to  have  this  rifjht, 
even  though  some  other  bank  or  banking  house  is  designated  by  the 
drawer  as  the  place  of  payment. 

411 


§   155  FORGERY   AND    ALTERATION.  [CH.  XIV. 

Inasmuch  as  the  cashier  of  a  bank  is  authorized  to  make 
bis  bank  a  party  to  a  bill,  note  or  check,  by  adding  to  his  own 
signature  the  word  "  cashier;  "  it  is  not  considered  to  be  a 
material  alteration  for  any  one  without  authority  to  add  to 
the  signature  the  name  of  the  bank  of  which  he  is  cashier. ^ 
Inasmuch  as  the  marginal  figures  of  the  amount  of  money 
payable  on  a  note  or  bill  are  held  not  to  be  a  part  of  such 
note  or  bill,  any  alteration  of  them  is  not  considered  to  be 
so  material  as  to  affect  the  rights  of  the  parties  in  the 
instrument.^  So,  also,  and  for  the  same  reason,  is  it  held 
to  be  immaterial,  if  a  change  is  made  in  the  figures  in  the 
margin,  which  denote  the  number  of  the  bill,  note  or  check, 
in  a  particular  series.^  Other  examples  might  be  added, 
such  as  changes  in  the  names  of  the  parties,  in  order  to 
make  the  written  name  conform  to  the  real  name  of  the 
party. ^  In  all  of  them,  the  alteration  is  held  to  be  imma- 
terial, because  the  substantial  rights  and  liabilities  have  not 
in  any  wise  been  thereby  affected.^ 

§  155.  Rights  of  bona  fide  holder  of  forged  or  altered 
hill  or  note — Effect  of  estoppel. —  The  general  rule  is 
that  a  party  to  a  bill  or  note,  whose  liability  thereon  has  been 
affected  by  an  alteration  in  its  terms  and  provisions,  is  not 
liable,  even  to  a  bona  fide  holder.®     And  there    are  cases 

1  Folger  V.  Chase,  18  Pick.  63;  Bank  of  Genesee  v.  Patchin  Bank,  13 
N.  Y.  309.     Seean«e,  §44. 

2  Smith  V.  Smith,  1  R.  I.  398  (53  Am.  Dec.  652) ;  Houghton  «.  Francis, 
29  111.  244.  But  see  Garrard  v.  Lewis,  L.  R.  10  Q.  B.  30.  See  ante, 
§21. 

3  Com.  V.  Indust.  Sav.  Bk.,  98  Mass.  12;  Birdsell  v.  Russell,  29  N.  Y. 
220;  City  of  Elizabeth  v.  Force,  29  N.  J.  Eq.  (2  Stew.)  587;  State  v. 
Cobb,  64  Ala.  127;  Suffell  v.  Bank  of  England,  L.  R.  7  Q.  B.  270. 

*  Manufacturers  &  M.  Bk.  v.  Follett,  11  R.  I.  92  (23  Am.  Rep.  418); 
Hayes  r.  Matthews,  63  Ind.  412  (30  Am.  Rep.  226);  Burlingame  v.  Brew- 
ster, 79  111.  515  (22  Am,  Rep.  177);  Ryan  v.  First  Nat.  Bank,  148  111. 
349  (35  N.  E.  1120);  Blair  v.  Bank  of  Tennessee,  11  Humph.  84. 

5  See  Cushing  v.  Field,  70  Me.  50  (35  Am.  Rep.  293);  Leonard  v. 
Phillips,  39  Mich.  182  (33  Am.  Rep.  370);  Ryan  v.  First  Nat.  Bk.,  148 
111.  349  (35  N.  E.  1120)  ;  Brock  v.  Brock,  29  111.  App.  334  (interest  from 
maturit}^  ;  Holland  v.  Hatch,  15  Ohio  St.  464. 

6  Roach  V.  Woodall,  91  Tenn.  206  (18  S.  W.  407);  Newman  v.  King, 

412 


CH.  XIV.]  FORGERY    AND    ALTERATION.  §    155 

which  hold  that  such  ii  party  is  not  in  any  case  liable  to 
any  one  on  the  altered  bill  or  note,  where  the  alteration 
has  been  made  without  his  consent.^  But  the  weight  of 
judicial  opinion  is  cast  in  favor  of  the  proposition  that,  if 
the  alteration  is  so  successful  that  it  cannot  be  readily  de- 
tected, and  it  has  been  made  possible  by  the  negligence  of 
the  party  executing  the  instrument,  in  leaving  blank  spaces 
uncanceled,  a  bona  fide  holder  can  recover  on  the  altered 
instrument  against  the  partv  wliose  negligence  is  thus 
established.  But  negligence  on  the  part  of  the  maker  or 
drawer,  and  successful  concealment  of  the  fact  of  altera- 
tion, must  co-exist. 2 

It  has  also  been  held  to  be  culpable  negligence,  render- 
ing one  liable  to  a  bona  fide  holder  on  an  altered  instru- 
ment, to  write  the  whole  or  a  part  of  the  instrument  with  a 
pencil,  where  the  alteration  had  been  made  by  an  erasure  of 
the  part  which  had  been  so  written. "^  In  previous  sections^ 
it  has  been  explained  that  the  acceptor  of  a  bill  is  estopped 
from  denying  the  genuineness  of  the  signature  of  the 
drawer,  but  not  of  the  contents  of  the  bill;^  that  the  traus- 

54  Ohio  St.  273  (43  N.  E.  683)  ;  Gettysburg  N.  Bk.  v.  Chisolm,  169  Pa.  St. 
564  (32  A.  730);  Derr  v.  Keough  (Iowa),  65  N.  W.  339;  Middaugh  v. 
EllioU,  1  Mo.  App.  462;  Farmers'  &  M.  N.  Bk.  v.  Novich  (Tex.),  34  S.  W. 
914. 

1  Greenfield  Sav.  Bk.  v,  Stowell,  123  Mass.  196;  (25  Am.  Rep.  67); 
Holmes  V.  Trumper,  22  Mich.  427  (7  Am.  Rep.  601);  Washington  Sav. 
Bk.  V.  Ekey,  51  Mo.  272.  See  Kuoxville  Nat.  Bk.  v.  Clark,  51  Iowa,  264; 
(33  Am.  Rep.  129;  1  N.  W.491). 

2  Angle  V.  N.  W.  &c.  Ins.  Co.,  92  U.  S.  530;  Scholfleld  v.  Londes- 
borough,  2  Q.  B.  660;  Rcdlich  v.  Doll,  54  N.  Y.  237  (13  Am.  Rep.  573)  ; 
Brown  v.  Reed,  79  Pa.  St.  370  (21  Am.  Rep.  75);  Gettysburg  N.  Bk.  v. 
Chisolm,  169  Pa.  St.  564  (32  A.  730) ;  Yocum  v.  Smith,  63  111.  321  (14  Am. 
Rep.  120)  ;  Blakey  v.  Johnson,  13  Bush,  197  (26  Am.  Rep.  254)  ;  Casou  r. 
Grant  Co.  Dep.  Bk.  (Ky.),  31  S.  W.  40;  Rainbolt  v.  Eddy,  34  Iowa,  440 
(11  Am.  Rep.  152);  Derr  v.  Keough  (Iowa),  05  N.  W.  339;  Paramore  v. 
Lindsley,  63  Mo.  63;  Winter  v.  Pool,  104  Ala.  580  (16  So.  543);  Vischer 
V.  Webster,  8  Cal.  109. 

3  Ilervey  w.  Smith,  55  111.  224;  Seibel  v.  Vaughan,  69  111.  257.  See 
Zimmerman  u.  Rote,  75  Pa.  St.  188;  Elliott  v.  Leviugs,  54  111.  213,  where 
a  material  clause  is  so  negligently  affixed  as  that  it  may  be  easily 
removed. 

*  See  ante,  §  72. 

413 


§  156  FORGERY  AND  ALTERATION.        [CH.  XIV. 

ferier  and  inclorser,  alike,  warrant  the  genuineness  and 
validity  of  every  part  of  the  instrument  which  has  been 
transferred  or  indorsed  ;  ^  and  that  any  party  to  a  bill  or 
note,  whether  a  primary  or  secondary  obligor,  may  be 
estopped  from  setting  up  the  defense  of  forgery  or  inva- 
lidity from  any  cause,  as  against  a  hova  fide  holder,  who 
has  taken  the  paper  in  reliance  upon  the  assurance  of  such  a 
party,  that  it  is  free  from  the  taint  of  suspected  illegality 
or  invalidity .2  By  a  reference  to  these  preceding  sections, 
it  becomes  unnecessary  to  do  more  in  the  present  connec- 
tion th:in  to  refer  the  student  to  the  cases,  in  which  forgery 
was  the  particular  ground  of  defense  to  an  action  on  the 
instrument  by  a  bona  fide  holder,  and  which  was  success- 
fully set  aside  by  the  claim  of  an  estoppel. ^ 

§  156.  Recovery  of  money  paid  on  a  forged  bill  or 
note. —  In  conformity  with  the  general  rule  of  law,  that 
money  paid  under  a  mistake  of  fact  may  be  recovered  back, 
any  party  to  a  forged  bill  or  note  may  recover  back  from 
the  party  receiving  it  the  money  which  has  been  paid  under 
the  mistaken  belief  in  its  genuineness,  providing  there  has 
been  no  culpable  delay  in  giving  notice  of  the  discovery  of 
foro-ery.  The  general  rule  in  this  country  requires  that 
notice  must  be  given,  and  demand  made,  within  a  reasona- 
ble time  after  the  discovery  of  the  forgery  or  alteration. 
This  rule  applies  to  checks,  as  wall  as  to  bills  and  notes, 
and  whether  there  are  any  indorsers  or  not.*     Where  the 

1  §§  76,  84. 

2  §  100. 

s  Leather  Man.  Nat.  Bank  v.  Morgan,  117  U.  S.  96;  "Wellington  v. 
Jackson,  121  Mass.  157;  Wilson  v.  Law,  112  N.  Y.  536  (20  N.  E.  399); 
Shisler  v.  Van  Djke,  92  Pa.  St.  447  (37  Am.  Rep.  702);  West  Phila.  N. 
Bk.  V.  Field,  143  Pa.  St.  473  (22  A.  829);  Casco  Bk.  v.  Keene,  53  Me.  103; 
VVorkmau  v.  Wright,  33  Ohio  St.  405  (31  Am.  Rep.  646);  Rudd  v. 
Matthews,  79  Ky.  479  (42  Am.  Rep.  231);  Dow  v.  Spenny,  29  Mo.  386; 
Woodruff  V.  Munroe,  33  Md.  146. 

*  Gloucester  Bk.  v.  Salem  Bk.,  17  Mass.  33;  "Welch  v.  Goodwin,  123 
Mass.  71  (25  Am.  Rep.  13);  United  States  v.  Onondaga  Co.  Sav.  Bk.,  39 
Fed.  259;  Allen  v.  Fourth  Nat.  Bk.,  59  N.  Y.  12.;  Welsh  v.  German  Am. 
Bk.,  73  N.  Y.  424  (29  Am.  Rep.  175);  Ellis  v.  Ohio  L.  Ins.  Co.,  4  Ohio 
St.  628;  Stratton  v.  McMakiu,  81  Ky.  641  (renewal  note  a  forgery  as  to 
414 


CH.  XIV.]  FORGERY    AND    ALTERATION.  ILL.  CAS. 

instrument  is  a  complete  forgery  in  every  part,  it  need  not 
be  returned  with  tlie  demand  for  repayment  of  the  money, 
which  has  been  paid  on  it;  but  if  there  are  some  genuine 
signatures  on  it,  or  in  the  case  of  alteration  of  the  body  of 
the  instrument,  it  must  be  returned,  so  that  the  transferrer 
or  indorser,  who  is  to  make  the  payment  of  the  considera- 
tion, may  have  the  means  of  enforcing  whatever  rights  of 
action  he  may  have  on  the  instrument  against  others.^ 
And  if  the  holder  is  in  possession  of  any  collateral  security, 
he  can  be  required  to  surrender  it,  or  account  for  its  dis- 
appearance. ^ 


ILLUSTRATIVE    CASES. 


Little  Rock  Trust  Co.  v.  Martin,  67  Ark.  277  (21  S.  W.  468). 

Ryan  v.  Fir&t  Nat.  Bank  of  Springfield  (35  N.  E.  1120). 

Citizen's  Nat.  Bank  v.  Importers'  and  Traders'  Bank,  119  N.  Y.  195  (23 

N.  E.  540). 

Inserting  a  Rate  of  Interest,  where  None  Had  Been 
Agreed  Upon,  is  a  Material  Alteration  AVhich  Avoids 
tbe  Note. 

Little  Rock  Trust  Co.  v.  Martin,  57  Ark.  277  (21  S.  W.  468). 

Battle,  J.  This  was  an  action  on  a  note  in  the  following 
words  and  figures : — 

"  Saline  Co.,  Ark.,  January  17th,  18 — .  On  or  before  the  first 
day  of  November,  1889,  I  promise  to  pay  L.  Cahill  &  Co.  or 
bearer  seventy  dollars,  at  Bank  of  Little  Rock;  value  received. 
If  paid  at  maturity,  interest  at  eiglit  per  cent  from  November  1, 

1889  ;  but,  if  not  paid  when  due,  interest  at per  cent  per 

annum  from  date  until  paid.  No  promise  or  contract  outside  of 
this  note  will  be  recognized.  [Signed]  S.  R.  Martin,  J.  W. 
Huey." 

The  defense  was,  the  note  had  been  materially  altered  since  it 
was  executed.     The  second  sentence  in  the  note,  as  executed, 

one  party  suit  on  original  note  allowed);  Tliird  Nat.  Bank.  v.  Allen,  69 
Mo.  310;  Baldwin  v.  Tlirelkeld,  8  Ind.  App.  312  (34  N.  E.  851)  ;  Fraker  v. 
Little,  24  Kan.  598  (30  Am.  Rep.  2G2)  ;  City  Bank  v.  First  Nat.  Bank,  45 
Tex.  203. 

•  Brewster  v.  Burnett,  125  Mass.  68  (28  Am.  Rep.  203);  Smith  v. 
McNair,  19  Kan.  330  (27  Am.  Rep.  117).  See  United  States  v.  Onondaga 
Co.  Sav.  Bk.,  39  Fed.  259. 

2  First  Nat.  Bk.,  v.  Wolff,  79  Cal.  C9  (21  P.  551). 

415 


ILL.  CAS.  FORGERY   AND    ALTERATION.  [CH.  XIV. 

read  as  follows:     "If  paid  at  maturity,  interest  at per 

cent  from  November  1,  1889  ;  but,  if  not  paid  when  due,  inter- 
est at per  cent  per  annum  from  date  until  paid."     It  was 

altered  to  read:  "  If  paid  at  maturity,  interest  at  eight  per  cent 
from  November  1,  1889;  but,  if  not  paid  when  due,  interest  at 
per  cent  per  annum  from  date  until  paid." 

The  defendants  recovered  judgment,  and  the  plaintiff  appealed. 

Appellant  insists  that  the  alteration  of  the  note  had  no  legal 
effect,  and  was  therefore  immaterial.  It  is  said  in  its  abstract 
that  this  was  the  only  issue.  Was  the  legal  effect  of  the  note 
affected  by  the  alteration? 

Allowing  days  of  grace,  the  note  was  due  on  the  4th  of  Novem- 
ber, 1889.  If  paid  at  maturity,  the  note,  as  executed,  bore  no 
interest,  but,  as  altered,  8  per  cent  per  annum  from  the  1st  of 
November,  1889,  until  the  4th  of  the  same  month.  Wheeless  v. 
Williams,  62  Miss.  369;  Bank  v.  Wager,  2  Cow.  712.  The  dif- 
ference is  slight,  but  the  maxim,  ^  de  minimis  non  curat  lex,"  is 
not  applicable  to  cases  like  this.  The  alteration  made  the  note 
void.  Craighead  v.  McLoney  (Pa.),  14  Cent.  Law  J.  192; 
Stephens  v.  Graham,  7  Serg.  &  R.  505  ;  Kennedy  v.  Bank,  18  Pa. 
St.  347.     Affirmed. 


Immaterial   Alteration    does    not  Constitute  a  Forgery, 
and  does  not  Invalidate  tlie  Instrument. 

Ripley  v.  First  Nat.  Bank  of  Springfield,  148  111.  349  (36  N.  E.  1120). 

Wilkin,  J.  This  is  an  action  of  assumpsit  by  appellee  against 
appellants,  begun  in  the  circuit  court  of  Sangamon  county.  It 
has  been  tried  three  times  in  that  court,  and  as  often  heard  in  the 
appellate  court  of  the  third  district.  The  last  judgment  of  the 
circuit  court  was  for  plaintiff  for  the  amount  of  the  note  sued 
on,  which  has  been  affirmed  by  the  appellate  court.  On  August 
30,  1884,  appellants  J.  F.  Ryan  and  W.  J.  Reilly  contracted  with 
one  P.  P.  O'Donnell  for  the  purchase  of  certain  chattel  property, 
agreeing  to  pay  him  therefor  $4,200.  They  executed  their  prom- 
missory  note  of  that  date  for  the  sum,  payable  to  the  order  of 
"  The  First  National  Bank  of  Springfield"  (appellee),  due  90  days 
after  date,  and  obtained  the  signatures  tliereto  of  Maggie  Ryan 
and  Mary  Reilly  as  sureties.  The  evidence  tends  to  show,  and 
for  the  purposes  of  this  opinion  the  fact  is  accepted  as  settled, 
that  it  was  understood  by  the  makers  of  this  note  and  O'Donnell 
that  by  delivering  it  to  the  bank  the  money  would  be  realized 
with  which  to  pay  for  the  goods  purchased.  After  it  was  signed 
by  all  the  makers,  J.  F.  Ryan  and  W.  J.  Reilly  took  it,  and 
shortly  afterwards  handed  it  to  O'Donnell.  The  three  then  went 
to  the  bank,  expecting  to  discount  it,  and  get  the  cash.  The 
cashier,  however,  declined  to  take  it  without  the  indorsement  of 
O'Donnell,  who,  after  some  hesitancy,  consented  to  do  so. 
Instead  of  signing  his  name  upon  the  back  of  the  paper,  he  wrote 
416 


CH.  XIV.]  FORGERY    AND    ALTERATION.  ILL.  CAS. 

it  at  the  foot  of  the  note,  after  the  signatures  of  the  makers. 
The  bank  then  discounted  it  to  tlic  amount  of  interest  it  called 
for  for  the  90  days,  $8G.40,  O'Donnell  insistins:  that  he  was  to 
have  the  full  amount  of  S4,200.  Ryan  and  Reilly  went  out  and 
got  the  $80.40,  and  paid  it  to  the  bank.  It  thereupon  placed  to 
the  credit  of  O'Donnell  $4,200  and  the  parties  left,  Ryan  and 
Reilly  immediately  taking  ])ossession  of  the  goods  purchased. 
In  a  few  minutes  O'Donnell  returned  to  the  bank,  and  told  the 
cashier  that  his  name  should  have  been  signed  on  the  back  of  the 
note,  that  he  did  not  want  to  be  a  party  to  it  as  a  maker.  The 
cashier  told  him  it  made  no  difference  as  to  his  liability,  but  he 
insisted  ui)on  having  it  changed,  and  the  cashier  finally  erased  his 
signature  at  the  foot  of  the  note,  wrote  his  name  before  the 
words,  "  The  First  National  Bank  of  Springfield,"  and  placed  the 
bank's  guaranty  stamp  on  the  back,  which  O'Donnell  signed.  It 
thus  ai)[)ears  that,  as  originally  written,  the  note  was  payable  to 
appellee,  signed  by  appellants.  As  first  changed,  it  appeared  to 
be  payable  to  appellee,  signed  by  appellants  and  O'Donnell,  but 
it  was  in  fact  pa}  able  to  appellee,  signed  by  appellants,  and 
indorsed  by  O'Donnell.  As  last  changed  it  was  made  payable  to 
O'Donnell,  but  simultaneously  indorsed  and  guarantied  by  him 
to  appellee.  On  each  of  the  trials  below  the  defense  relied 
upon  was  that  the  note  had  been  so  altered  after  its  execution, 
without  the  consent  of  the  makers,  as  to  discharge  tliem  from  all 
liability  upon  it,  and  the  only  substantial  question  before  us  for 
decision  is  whether  or  not,  on  the  facts  above  stated,  that  defense 
was  made  out. 

The  last  tiial  was  upon  a  declaration  containing  a  special  count, 
describing  the  note  as  originally  made,  and  the  common  counts. 
The  note  was  offered  in  evidence  as  finally  changed,  and  the 
defendants  objected.  The  objection  was  overruled,  and  this 
appellants  insist  was  error.  The  execution  of  the  note  was 
proved,  and  it  is  clear  that,  if  it  was  not  rendered  invalid  hy 
alterations,  it  was  admissible  under  the  common  counts.  Box- 
berger  v.  Scott,  88  111.  477.  Recurring,  tlien,  to  the  principal 
question,  it  seems  to  be  well  settled  that,  while  the  general  rule 
is  that  the  unauthorized  alteration  of  a  contract  by  a  party  to  it 
renders  it  void,  the  rule  has  been  so  far  relaxed,  at  least  in  this 
country,  that  such  an  alteration,  evin  though  made  by  a  party  to 
the  contract,  will  not  destroy  its  validity,  unless  the  alteration  is 
found  to  be  material.  2  Pars.  Cont.  720.  As  expressed  by  Mr. 
Daniel  in  his  work  on  Negotiable  Instruments,  Vol.  2,  p.  359): 
Not  eveiy  change  in  a  bill  or  note  amounts  to  an  alteration.  If 
the  legal  effect  be  not  changed,  the  instrument  is  not  altered, 
although  some  change  may  have  been  made  in  its  appearance, 
either  by  the  addition  of  words,  which  the  law  would  imply,  or  by 
striking  out  words  t)f  no  legal  significance."  This  court  said  in 
Vogel  V.  Ripper,  34  111.  lOG :  "The  effect  of  an  alteration  in  a 
written  instrument  depends  upon  its  nature,  the  person  by  whom, 
and     the     intention    with     which     it     wa3    made.     If     neither 

27  417 


ILL.   CAS.  FORGERY    AND    ALTERATION.  [CH.   XIV. 

the  rights  or  interest,  duties  or  obligations  of  either  of  the 
parties  are  in  any  manner  changed,  an  alteration  may  be  con- 
sidered as  immaterial,"  The  controlling  question,  then,  in  this 
case  is,  were  the  changes  made  in  the  note  sued  upon,  or  either 
of  thorn,  material,  within  the  meaning  of  the  law?  As  shown  by 
the  authorities  already  cited,  a  change,  to  be  material,  must  in 
some  way  affect  the  legal  rights  of  the  parties  as  they  were 
expressed  before  the  change  was  made.  Daniel  says,  citing  Hol- 
land V.  Hatch,  15  Ohio  St.  464:  "  And  in  no  case  is  a  change  in 
the  phraseology  of  the  instrument  material  when  it  does  not 
essentially  change  its  legal  effect."  See,  also,  Pars.  Bills  &  N. 
560.  It  is  also  competent,  in  determining  whether  a  change  has 
materially  affected  the  rights  of  the  parties,  to  take  into  consid- 
eration tbeir  intention  when  the  agreement  was  executed.  Thus 
the  date  of  a  note  may  be  changed  so  as  to  make  it  correspond 
with  the  intention  of  the  parties  without  affecting  its  validity. 
Duker  v.  Franz,  7  Bush  273 ;  Hervey  v.  Harvey,  15  Me.  357 ; 
Pars.  Bills  &  N.  569,  570.  In  Ames  v.  Colburn,  11  Gray,  390, 
Metcalf,  J.,  said:  "The  altpration  of  the  date  of  the  note  was 
made  by  tlie  promisee,  without  the  knowledge  or  express  consent 
of  the  promisor,  but,  as  the  arbitrator  has  found  that  it  was 
made  without  any  fraudulent  intention,  and  merely  to  correct  a 
mistake,  and  make  the  note  such  as  both  parties  intended  it 
should  be,  and  understood  it  was,  we  are  of  opinion,  upon 
the  authorities,  that  the  note  was  not  vacated  by  the  altera- 
tion, and  the  plaintiff  is  entitled  to  judgment  on  the 
award."  In  Derby  v.  Thrall,  44  Vt.  413,  the  defendant  was 
surety  on  a  note  payable  to  the  plaintiff.  Through  a  mistake 
the  plaintiff's  given  name  was  wrongly  written  in  the  body  of 
the  note,  and  he,  after  it  was  delivered  to  him,  with  the 
consent  of  the  principal  maker,  but  without  the  knowledge 
or  consent  of  the  defendant,  changed  the  name  of  the  payee  so 
as  to  correct  the  mistake,  an*!  it  was  held  the  alteration  was  not 
material  in  the  sense  of  invalidating  the  instrument.  As  originally 
written  it  was  payable  to  Franklin  Derby.  By  the  change  it  was 
made  payable  to  Francis  E.  Derby.  The  court  said:  "The 
change  made  no  alteration  in  the  liability  or  obligation  of  the 
maker.  There  was  no  change  in  the  party  to  whom  the  obliga- 
tion was  assumed.  The  only  effect  of  the  alteration  was  to  cor- 
rectly describe  the  party  to  whom  the  promise  was  in  fact  under- 
standingly  made."  The  reasoning  applies  with  full  force  to  this 
case.  It  is  not  denied  that  it  was  the  intention  of  appellants, 
when  they  executed  the  note,  to  obligate  themselves  to  pay  "  to 
the  order  of  '  The  First  National  Bank  of  Springfield,  Illinois.'  " 
That  was  the  language  of  their  contract.  That  they  are  being 
called  upon  by  this  action  to  pay  to  a  different  person  or  company 
is  not  pretended.  The  change  of  the  payee  and  the  indorsement 
and  guaranty,  had,  therefore,  no  other  effect  than  to  carry  out 
the  intention  of  the  parties  when  they  signed  the  note. 

But,  aside  from  the  question  of  intention,  we  are  unable  to  see 

418 


CH.  XIV.]  FORGERY    AND    ALTERATION.  ILL.  CAS. 

how  the  legal  liability  of  the  makers  was  changed.  It  is  too 
clear  for  argument  that  the  placing  of  the  name  of  O'Donnell  at 
the  foot  of  the  note  was,  in  the  light  of  the  attending  facts,  no 
change  whatever.  lie  was  requested  to  indorse  the  note,  and  he 
signed  his  name  for  that  purpose,  and  no  other.  While  the  word 
"  indorse,"  means  a  writing  on  the  back,  it  can  always  be  shown 
that  a  signature  on  the  face  of  an  instrument  was  placed  there 
n(jt  as  a  maker,  but  for  the  purpose  of  binding  the  party  as  in- 
dorser  only.  Herring  v.  Woodhull,  29  111.  92.  The  legal  effect, 
then,  of  O'Donnell  signing  his  name  on  the  face  of  the  paper  as 
indorser  was  precisely  the  same  as  though  he  had  signed  it  on  the 
back,  and  no  one  could  pretend  that  the  latter  would  have 
amounted  to  an  alteration  of  the  instrument.  If  he  had  signed 
it  upon  the  back  in  the  first  place,  not  being  the  payee,  the  bank 
could  have  written  over  his  signature  just  such  a  guaranty  as  now 
appears  over  it,  and  the  rights  of  all  the  parlies  wouhl  have  been 
just  the  same  as  the}'  now  are.  A  third  party  indorsing  a  note 
becomes  liable  as  a  guarantor.  Camden  v.  McKoj',  3  Scam. 
437 ;  Boynton  v.  Pierce,  79  III.  145.  Cie:irly  such  an  indorse- 
ment would  have  been  legitimate,  and  in  no  sense  an  altera- 
tion. 

It  only  remains,  therefore,  to  be  determined  whether  making 
the  note  payable  to  O'Donnell  instead  of  the  bank,  and  at  the 
same  time  assigning  it  back  to  it  with  tiie  guaiaii'y,  changed 
"the  rights  or  interests,  duties  or  oltligations  of  either  of  the 
parlies."  Was  tlie  legal  effect  of  the  obligation,  as  between  the 
bank  and  the  makers,  thereby  essentially  changed  ?  As  originally 
made,  it  would  have  been  the  duty  of  the  makers  to  pay  the 
bank  $4,200  at  the  expiration  of  90  days.  How  can  it  be  said 
that  that  duty  was  either  enlarged  or  dirainislu  d  b}'-  the  change? 
The  rights  and  duties  of  the  bank,  as  between  it  and  the  makers, 
were  precisely  tlie  same  after  as  before  the  change.  True,  it 
bad  also  the  guaranty  of  O'Donnell,  but  that  it  had  a  right  to 
obtain  without  reference  to  the  change  made  in  the  payee.  His 
guaranty  neither  enlarged  nor  diminished  the  rights  of  the  banks 
against  ap[)ollaiits.  Counsel  say  O'Donnell  becanio  the  indorser, 
an  I  not  the  guarantor  of  the  note  ;  that,  being  only  an  indorser, 
llie  bardi  was  re(iuirKl  to  lake  jiroinpt  action  to  enforce  payment 
from  the  makers,  in  order  to  hold  him  liaiile,  and  in  this  way  they 
say  the  makers  were  deprived  of  "  the  right  to  indulge  the  pre- 
sumption that  the  note  would  be  carried  if  desired."  The  riizht 
would  be  a  most  precarious  one  even  on  the  position  assumed,  but 
the  complete  answer  to  the  arjuim  ntis  the  fact  that  by  the  express 
terms  of  the  indorsement  O'Domu'll  became  a  guarantor,  and  not 
a  mere  indorser.  The  language;  of  the  indoiscmeiit  is:  "  For  value 
received,  I  hereby  guaranty  the  payment  of  the  within  note  at 
maturity,"  etc.  Cases  are  cited  in  wiiichit  was  held  that  changing 
name  of  the  payee  in  a  pri  missory  note  was  a  material  alteration. 
With  those  cases  we  find  n)  fault  whatever.  They  were  decided 
upon  a  slate  of  facts  which  showed  that  the  change  would  or 

4iy 


ILL.  CAS.  FORGERY    AND    ALTERATION.  [CH.  XIV. 

might  have  resulted  in  imposing  other  duties  and  obligations  upon 
the  parties. 

It  seems  to  be  thought  that  the  fact  that  two  of  the  makers  of 
this  note  signed  it  as  securities  should  affect  the  decision  of  the 
case.  Wedonottbiukso.  On  this  record,  if  the  change  amounted 
in  law  to  a  material  alteration  of  the  note,  all  the  makers  were 
discharged;  if  material,  the  obligation  of  the  sureties  is  in  no  way 
changed. 

Whatever  may  be  said  as  to  the  propriety  of  the  conduct  of  the 
cashier  of  the  bank,  when  tested  by  the  rules  of  business,  it 
clearly  appearing  tbat  no  wrong  was  intended,  and  there  being 
nothing  in  the  record  to  show  that  appellants  would  have  been  or 
could  have  been  injured  by  that  conduct,  we  are  of  the  opinion 
that  the  validity  of  the  note  was  not  destroyed. 

The  rulings  of  the  circuit  court  as  to  the  competency  of  evi- 
dence and  in  giving  and  refusing  instructions  were  in  conformity 
with  this  view,  and  to  follow  counsel  in  their  argument  on  that 
branch  of  the  case  would  be  but  to  repeat  what  we  have  already 
said.     The  judgment  of  the  appellate  court  will  be  aflflrmed. 


Liiability  of  Drawee  Bank  on  Check  which  has  been 
Paid  on  Forged  Indorsements. 

Citizens'  Nat.  Bank  v.  Importers'  and  Traders'  Bank,  119  N    Y.  195  (23 

N.  E.  540). 

Appeal  from  supreme  court,  general  term,  first  department. 

This  action  was  commenced  by  the  plaintiff,  a  bank  in  the  State 
of  Iowa,  to  recover  against  the  defendant,  a  bank  in  New  York 
city,  on  the  ground  of  the  non-paj'ment  of  certain  drafts  or  bills  of 
exchange  which  plaintiff  had  drawn  upon  the  defendant  in  favor 
and  to  the  order  of  Wadsworth  &  Co.  The  complaint  alleges,  in 
10  counts,  the  making  and  delivery  of  the  drafts,  their  indorse- 
ment by  the  payees,  a  presentation  and  demand  for  payment,  the 
defendant's  refusal,  and  its  protest  for  non-payment  thereof;  that 
at  the  time  of  defendant's  refusal  to  pay  the  plaintiff  had  suffi- 
cient funds  on  deposit  with  defendant  wherewith  to  pay  the 
drafts;  and  that  by  reason  of  the  non-payment  the  plaintiff  has 
been  compelled  to  pay  the  amount  of  the  drafts,  and  to  take  them 
up.  The  form  of  the  drafts  was  as  follows,  viz. :  "$3,269.65. 
State  of  Iowa.  No.  232,245.  The  Citizens'  National  Bank  of 
Davenport.  Davenport,  April  7,  1884.  Pay  this  first  of  ex- 
change, second  unpaid,  to  the  order  of  W.  C.  Wadsworth  &  Co., 
thirty-two  hui)dred  sixty-nine  65-100  dollars,  in  current  funds. 
E.  S.  Carl,  Cashier.  To  Importers'  and  Traders'  National  Bank, 
New  York."  The  defense  set  up  in  tbe  answer  was  the  payment 
of  the  described  paper  to  the  Fourth  National  Bank,  as  the  holder 
thereof  through  various  indorsements.  The  answer  admitted  the 
possession  by  defendant  of  sufficient  deposits  from  the  plaintiff  to 

420 


CH.   XIV.]  FORGERY    AND    ALTERATION.  ILL.   CAS 

pay  all  of  the  paper.  Upon  the  trial  these  facts  were  developed :  W. 
«&;  Co.  bought  these  drafts  from  the  plaintiff  bank  in  order  to  remit  to 
their  creditors  in  payment  of  sundry  accounts,  and,  having  appro- 
priately indorsed  tbem,  delivered  them  to  their  bookkeeper,  to 
be  sent  off.  He,  however,  erased  the  indorsements,  and  forged 
others,  and  used  the  paper  for  his  own  purposes.  It  thereby  came 
into  other  hands,  and  through  theFourih  National  Bank  was  pre- 
sented to  and  paid  by  the  defendant.  Against  the  plaintiff's 
proofs  establishing  the  forgeries,  through  which  the  paper  was 
diverted  from  the  uses  ordered  by  W.  &  Co.,  the  defendant 
offered  nothing  in  disproof.  After  the  forgeries  were  discovered, 
and  upon  the  return  to  the  plaintiff  of  the  drafts  from  the  defend- 
ant, W.  &  Co.  demanded  and  obtained  them  back  from  the 
plaintiff,  and  indorsed  tliem  to  one  W.  for  collection.  He  was 
refused  payment  of  them  by  the  defendant  on  their  presentation  ; 
the  defendant's  cashier  placing  the  refusal  on  the  ground  of  liieir 
previous  payment.  W.  then  returned  them  to  the  payees,  "W.  & 
Co.  The  plaintiff  repaid  to  W.  &  Co.  the  moneys  wherewith  the 
drafts  had  been  purchased  by  them,  and  then  commenced  this 
action. 

Gray.,  J.  (after  stating  the  facts  as  above).  The  form  of  the 
complaint  is,  perhaps,  technically  open  to  a  criticism  that  it  seems 
to  ground  the  action  upon  the  drafts  themselves,  and  therefore 
makes  it  one  to  recover  plaintiff's  deposits.  Such  a  cause  of  action 
has  not  accrued  to  the  plaintiff  at  all,  upon  the  facts  in  this  record. 
The  cause  of  action  winch  is  stated  to  have  accrued  to  plaintiff  was 
for  the  refusal  of  the  defendant  to  honor  the  plaintiff's  drafts 
upon  it.  The  contract  between  the  two  banks,  as  implied  by  law, 
was  that  the  amount  of  funds  standing  to  the  credit  of  tiie  ])lain- 
tiff  })ank  on  the  defendant's  books  should  bo  held  and  jiaid  out 
upon  and  according  to  the  plaintiff's  ciiecks  or  order;  and  a 
failure  to  obey  an  order  for  tiicir  payment  was  a  breach  of  the 
defendant's  duty  and  contract,  for  whicii  it  is  legally  liable, 
either  in  tort  or  upon  tlie  contract.  In  this  case  the  breach 
^of  contract  occurred  upon  the  refusal  to  pay  the  plaintiff's 
drafts  upon  its  funds  to  the  order  of  the  payees  named, 
and  a  cause  of  action  then  arose  in  plaintiff's  favor.  But 
tbia  criticism  upon  the  form  of  the  complaint  is  not  serious 
in  its  results ;  for  the  pleading  may  be  upheld,  and  the 
action  maintained  as  one  simply  for  tlie  breach  of  the  defend- 
ant's contract  to  pay  the  drafts  of  the  plaintiff.  Code  Civil 
Proc,  §  481,  requires  that  a  complaint  shall  contain  a  plain  and 
woncise  statement  of  the  facts  constituting  the  cause  of  action ; 
and  that  requisite  is  met  here  sulUciently.  The  pleading,  after 
describing  the  drafts,  and  stating  the  procccdincs  up  to  protest 
for  non-payment,  alleges  "  that  at  the  time  said  defendant  so 
neglecle(l  and  refused  to  pa^',  *  *  *  plaintiff  had  sullicient 
money  or  funds  on  deposit  with  the  defendant  to  its  credit, 
and  subject  to  its  draft  or  order,  wherewith  to  pay,  *  »  * 
and  that  by  reason  ot  the   non-payment  the  plaintiff  has  been 

421  ' 


ILL.  CAS.  FORGERY    AND    ALTERATION.  [CH.  XIV. 

compelled  to  pay,  and  has  paid,  the  amount,"  etc.  That  is  a 
plain  statement  of  the  facts,  from  which,  as  a  legal  conclusion, 
the  plaintiff's  legal  right  to  recover  is  deducible,  and  the  defend- 
ant could  in  nowise  lie  misled.  This  seems  especially  true;  for 
by  its  answer  the  defendant  admits  that  it  was  indebted  to  the 
plaintiff  for  moneys  theretofore  deposited  sulijcct  to  its  draft, 
check,  or  order  in  more  tlian  a  sufficient  sum  to  pay  all  the  drafts ; 
and  it  relies,  to  defeat  the  action,  upon  the  defense  of  payment 
only.  As  to  the  cause  of  action,  I  tliink  it  clearly  one  which  did 
accrue  to,  and  became  enforceable  b}',  the  plaintiff.  In  the  first 
place,  we  must  rcgnrd  the  paper  as  never  having  been  i)aid  by 
defendant  to  the  order  of  the  plaintiff ;  for  the  rule  is  well  and 
long  established  that  a  forged  indorsement  does  not  pass  a  title  to 
commercial  paper,  negotiable  only  by  indorsement;  and  pa3^ment 
by  the  drawee,  although  in  good  faith,  of  a  draft  so  affected,  is 
no  payment  at  all,  as  to  the  true  owner.  Graves  v.  Bank,  17  N. 
Y.  205. 

It  was  the  defendant's  business  to  see  to  it  that  its  depositor's 
moneys  were  expended  according  to  its  directions;  and  every  ex- 
penditure was  at  the  defendant's  risk  of  the  direction  being  valid, 
and  the  indorsement  conveying  title  to  the  holder  genuine.  Corn 
Exchange  Bank  v.  Nassau  Bank,  91  N.  Y.  74,  81. 

The  defendant  made  no  attempt  to  disprove  tlie  plaintiff's  evi- 
dence as  to  the  forged  indorsements  of  the  payees'  names  and 
orders,  and  the  forgeries  must  be  taken  as  proved.  Forgeries  may 
consist,  in  the  legal  sense,  of  any  fraudulent  alteration  of  paper 
by  which  another  may  be  defrauded.  Chit.  Bills,  781.  So  we 
have  no  payment  by  the  defendant  of  these  drafts  proved;  and 
the  question  becomes  solely  one  upon  its  objection  to  the  right  of 
the  plaintiff  to  maintain  this  action  for  non-payment  by  the  de- 
fendant, to  third  persons,  of  the  drafts.  Its  counsel  says  the 
proper  remedy  was  to  sue  for  the  deposits.  That  is  not  so. 
Here  the  cause  of  action  is  the  breach  of  the  implied  and  con- 
cealed contract  to  pay  out  the  plaintiff's  funds  according  to  its 
drafts  and  order.  The  remedy  was  to  sue  for  the  breach,  and  to 
recover  against  the  defendant  in  an  amount  equal  to  the  amount 
of  the  plaintiff's  drafts  which  were  refused  payment.  That  the 
plaintiff  repaid  to  W.  &  Co.  the  moneys  they  had  ))aid  to  it  to 
obtain  these  drafts,  and  thereby  reacquired  the  paper,  is  wholly 
immaterial  as  long  as  the  action  is  not  upon  the  drafts  themselves. 
If  the  plaintiff  was  suing  upon  this  paper  through  a  derivative 
title  from  W.  &  Co.,  it  would  be  a  very  different  question  indeed. 
But  the  payment  back  of  the  moneys  to  W.  &  Co.  established  the 
damage,  and  its  extent,  to  which  the  defendant's  act  subjected 
the  plaintiff.  The  acquisition  thereby,  and  the  holding  and  exhi- 
bition, of  the  dishonored  drafts,  are  evidences  of  the  facts  consti- 
uting  the  cause  of  action.  In  recent  cases  this  court  has  passid 
upon  similar  questions  as  to  the  rights  of  drawers  of  checks,  to 
which  we  may  in  fact  liken  this  paper.  In  Bank  of  British  N.  A.  v. 
Merchants'  Nat.  Bank,  1  N.  Y.  Ill,  the  case  shows  the  payment 

422 


CH.   XIV.]  rOKGEKY    AND    ALTERATION.  ILL.   CAS. 

by  the  defendant  bank  of  a  check  given  b3'  the  plaintiff  bank  to  H., 
and  made  payable  to  hor  order.  Her  indorsement  was  forged,  and 
the  money  collected  by  another  person.  When  the  facts  of  the 
forgery  and  of  the  payment  weie  discovered,  the  action  was  com- 
menced. It  is  true  the  only  defcLse  was  the  statute  of  limita- 
tions;  but  Earl,  J.,  in  his  opinion,  which  wos  concurred  in  by  all 
the  judges,  said :  "  When  the  defendant  paid  the  check  upon  the 
forged  indorsement,  it  paid  its  own  mone}',  and  discharged  no 
part  of  its  indebtedness  to  the  plaintiff.  *  *  *  The  plaintiff 
lost  none  of  its  rights  by  receiving,  under  a  mistake  as  to  the 
facts,  the  check  as  one  properly  paid  and  chuiircd  to  its  account 
by  the  defendant."  But  later,  in  the  case  of  Viets  v.  Bank,  101 
N.  Y.  563  ;  5  N.  E.  Rep.  457,  this  rule  was  laid  down,  that  "  the 
refusal  to  pay  on  presentation  of  the  check,  whicli  presentation  is 
equivalent  to  a  demand  of  pajanent,  gives  to  the  drawee  a  right 
of  action,  in  case  he  has  funds  in  the  bank  to  meet  the  check,  and 
the  refusal  to  pay  is  without  his  authoiity." 

This  doctrine,  I  find,  has  the  distinct  support  of  a  decision  of 
the  king's  bench  in  the  case  of  Marzetti  v.  Williams,  1  Barn.  & 
Adol.  415.  That  was  an  action  by  the  drawer  of  a  check  against 
his  bankers  for  failing  to  pay  it  to  the  payees  named  tiierein  on 
presentation.  The  dishonor  was  tlin  ugh  some  inadvertence  of 
the  bankers;  and,  as  matter  of  fact,  the  check,  being  presented 
the  next  day,  was  then  paid.  Lord  Tenterden  held  that  the 
action  was  maintainable  as  one  founded  on  the  bankers'  implied 
contract  with  his  cu-tomer  that  he  will  pa}' checks  drawn  by  him, 
provided  he  has  moneys  of  tlie  customer,  and  a  breach  of  that 
contract  was  created  when  the  defendants  would  not  pay  the 
check.  Nominal  damages  were  awarded  the  plamtiff  in  tiiat  case, 
though  he  might  not  have  sustained  a  damage  in  fact.  Justices 
Parke,  Taunton,  and  Patterson  agreed  with  Lord  Tenterden, 
holding  that  it  was  immaterial  whether  the  action  was,  in  form, 
tort  or  assumpsit.  The  rule  is  well  supported  in  principle  as  by 
the  authorities,  and  governs  this  case.  The  damage  to  the 
plaintiff  here  was  not  merely  nominal,  for  the  dishonor  of  its 
drafts,  but  actual,  for  the  amount  presented  by  them,  and  which 
the  |)laintiff  had  to  make  good  to  the  payees. 

There  is  but  one  other  question  which  I  think  calls  for  further 
consideration,  and  that  is  as  to  the  exclusion  of  certain  evidence 
whicli  the  di  fendant  sought  to  elicit  from  the  witness  Wadsworth. 
By  a  question  to  that  witness,  who  was  oiic  of  the  i)ayees  of  the 
drafts,  defendant  endeavored  to  prove  that  when  the  plaintiff 
paid  back  to  Wadsworth  &  Co,  the  moneys  for  the  drafts  which 
had  been  dishonored  they  had  settled  with  their  bookkeeper, 
and  for  this  indebtedness  to  them,  ir.cluding  the  appropriation 
by  him  of  these  drafts,  had  received  certain  property.  In 
support  of  their  right  to  make  this  proof,  they  argued  that  if 
W.  &  Co.  had  made  a  settlement  with  their  bookkeeper  they 
were  not  in  any  condition  to  demand  back  the  drafts  which 
had  been  returned  to  the  plaintiff  by  the  defendant  as  paid,  and 

423 


ILL.   CAS.  FORGERY    AND    ALTERATION.  [CH.  XIV. 

if  plaintiff  redelivered  the  drafts  to  them,  under  such  a  state 
of  facts,  it  acted  in  its  own  wrong,  and  the  defendant  would  not 
be  liable.  Without  discussing  the  features  of  such  a  case,  it  is 
suflflcient  to  say  that  there  are  two  good  reasons  for  the  exclusion 
of  the  evidence.  In  the  first  place,  no  such  defense  was  set  up 
by  the  answer,  nor  did  that  pleading  contain  any  allegation  which 
would  raise  any  other  issue  than  the  issue  of  payment.  In  the 
next  place,  the  question,  if  answered  according  to  its  tenor, 
would  not  elicit  any  proof  that  W.  &  Co.  had  been  paid.  It 
called  for  the  witness'  testimony  as  to  whetlier  his  firm  did  not 
charge  the  book-keeper  with  the  drafts,  and  then  take  from  him 
various  kinds  of  property  "  as  security  for  this  entire  indebted- 
ness, consisting  of  tlicse  checks  in  part;  and  did  they  not  receive 
that  property?  and  did  they  not  collect  something  from  it?  "  etc. 
But  that  they  may  have  received  some  securities  for  his  indebted- 
ness would  not  establish  the  fact  of  a  payment  and  extinguish- 
ment of  any  claim  based  on  the  purchase  of  the  drafts  which 
were  dishonored.  I  think  the  action  was  rightly  disposed  of 
below ;  and  the  judgment  appealed  from  should  be  aflSrmed,  with 
costs.  All  concur. 
424 


CHAPTER     XV. 

THE  RIGHTS   AND   LIABILITIES   OF    SURETIES    AND    GUAR- 
ANTORS. 

Section  157.  Sureties  and  guarantors  distinguished. 

158.  Form  and  requisites  of  a  guaranty. 

159.  Guaranty  as  appurtenant  to  a  bill  or  note. 

160.  Demand  of  principal  debtor  and  notice  of  default,  when 

necessary. 

161.  Concealed  sureties  as  accommodation  parties  —  Nature  of 

their    liability  —  Admissibility    of     parol    evidence   to 
prove  real  character. 

162.  What  will  discharge  guarantors  and  sureties  —  Surrender 

of  securities  and  extension  of  time  of  payment. 

163.  Remedies  of  surety  and  guarantor  —  ContriDution  between 

co-sureties. 

§  157.   Sureties    and    guarantors  distinguished. —  The 

surety  and  guaraDtor  both  promise  to  answer  for  the  debt 
of  another;  but  their  characters,  and  therefore  their  rights, 
are  different,  on  account  of  the  different  relations  they 
bear  to  the  other  parties,  and  to  the  original  contract.  A 
guarantor  is  one  who,  by  independent  agreement  or  con- 
tract, promises  to  answer  for  the  del^t,  default  or  miscar- 
riage of  another,  it  matters  not  what  may  be  the  character 
of  the  contract  or  obligation,  which  is  guaranteed.  There 
may  be  a  guaranty,  strictly  so-called,  of  a  bill  or  note,  as 
well  as  of  any  other  executory  contract.  But,  while  it  may 
be  possible  for  one,  in  the  strict  sense  of  the  teim,  to  be- 
come a  surety  of  any  kind  of  contract,  it  is  customary  to 
confine  the  employment  of  the  name  to  those  who  guarantee 
the  payment  of  a  bill,  note,  or  other  negotiable  instrument, 
by  becoming  a  regular  party  to  the  paper,  whether  as 
drawer  or  acceptor  of  a  bill,  the  joint  maker  of  a  note  or 
indorser  of  either.  The  surety's  character  as  a  guarantor 
is,  so  far  as  the  holder  of  the  bill  or  note  is  concerned, 
merged  and  lost  in  his  character  as  a  regular  party  to  the 

4i'5 


§    158  SURETIES    AND    GUARANTORS.  [CH.   XV. 

instrument.  That  is,  he  is  either  joint-maker  of  a  note, 
drawer  or  acceptor  of  a  bill,  or  indorser  ;  and  his  rights, 
except  as  to  the  right  of  subrogation  to  collateral  secur- 
ities, held  by  the  holder  of  the  bill  or  note,  are  the  same, 
as  if  he  had  not  become  a  party  to  the  instrument  for  the 
accommodation  of  the  real  debtor.  All  sureties  are  accom- 
modation parties.^ 

But  a  guarantor  is  never  a  regular  party  to  a  bill  or  note. 
His  obligation  rests  upon  a  separate  collateral  agreement. 
And  the  character  of  his  obligation  is  not  necessarily  the 
same  as  that  of  a  surety,  although  they  both  promise  to  pay 
the  same  debt  of  another. ^ 

§  158.   Forms  and  requisites  of  a  guaranty. —  It  is  not 

required  that  the  guaranty  shall  assume  any  particular 
form.  It  may  be  written  on  a  separate  piece  of  paper,  or 
on  or  across  the  bill  or  note,  whose  payment  is  guaranteed. 
The  guaranty  may  be  absolute,  or  conditional  upon  the 
happening  of  some  other  contingency  than  the  default  of 
the  principal  debtor.^  It  may  refer  to  past,  present  or 
future  indebtedness,  and  it  may  be  limited  or  unlimited  in 
respect  to  the  amount  of  the  debt  and  the  time  of  contract- 

1  Bank  of  U.  S.  v.  Hatch,  6  Pet.  250;  Wallace  v.  McConnell,  13  Pet. 
13G;  Sayles  v.  Sims,  73  N.  Y.  551;  Benedict  v.  Olson,  37  Minn.  431  (35 
N.  W.  10);  Raymond  v.  McNeal,  36  Kan.  471  (13  P.  814);  National  Pem- 
berton  Bank  v.  Lougee,  108  Mass.  371  (11  Am.  Rep.  367) ;  Arents  v.  Com- 
monwealtii,  18  Gratt.  750;  Schmidt  v.  Archer,  113  Ind.  365  (14N.  E. 
543;  Blair  v.  Bank  of  Tennessee,  11  Humph.  83;  Priest  v.  Watson,  7 
Mo.  App.  578;  75  Mo.  310  (42  Am.  Rep.  409).  It  must,  however,  be 
remembered  that  there  is  a  difference  between  a  surety  and  a  regular 
party  to  a  bill  or  note,  in  that  a  surety  becomes  a  regular  party 
for  the  accommodation  of  another,  and  to  lend  his  credit  to  the 
paper.  See  Trimble  v.  Thorne,  16  Johns.  152  (8  Am.  Dec.  302) ; 
Bcardsley  v.  Warner,  8  Wend.  613;  Pollard  v.  Huff,  44  Neb.  892  (63  N. 
W.  58). 

2  It  should  be  observed  that  guaranties  will  be  discussed  in  these  pages 
only  so  far  as  such  discussion  is  necessary  to  explain  the  guaranties  of 
bills  and  notes. 

3  Lanusse  v.  Barker,  3  Wheat.  101 ;  Moakeley  v.  Riggs,  19  Johns.  69 
(10  Am.  Dec.  196);  Curtis  v.  Smallman,  14  Wend.  231;  Bishop  v.  Rowe, 
71  Me.  263;  Dickerson  v.  Derrickson,  39  111.  574;  Allen  v.  Harrah,  30 
Iowa,  363;  Johnston  v.  Mills,  25  Tcx.  704. 

426 


CH.  XV.]  SURETIES    AND    GUARANTORS.  §    158 

ing  the  debt,  as  well  as  to  the  number  of  debts  whose  pay- 
ment is  to  be  assured.  Generally,  where  the  singular 
number  is  employed  in  describing  the  debt  to  be  guaran- 
teed, as  where  one  guarantees  *'  any  sum  "  not  exceeding  a 
certain  amount,  the  guaranty  does  not  cover  more  than 
one  debt.  But  if  the  i)lural  is  employed,  "  any  sum  or 
sums,"  the  guaranty  will  include  all  the  debts  which  are 
contracted  by  the  party  guaranteed,  as  long  as  their  aggre- 
gate amount  does  not  exceed  the  limit  imposed  by  the 
guaranty.^ 

Like  all  other  contracts,  a  consideration  must  support  a 
guaranty,  in  order  that  it  may  be  enforced.  If  the  guar- 
anty is  given  contemi)oraneous1y  with,  or  antecedent  to,  the 
negotiation  of  the  bill  or  note  which  is  guaranteed,  the 
consideration  of  the  bill  or  note  will  likewise  support  the 
guaranty,  the  consideration  having  been  given  in  reliance 
upon  the  guaranty  and  the  original  promise.^  But  if  the 
guaranty  is  given  subsequent  to  the  negotiation  of  the  bill 
or  note,  there  must  be  a  fresh  and  independent  considera- 
tion for  such  guaranty,  unless  the  guaranty  has  been  given 
subsequently  in  performance  of  a  contemporaneous  agree- 
ment to  furnisji  it.^ 

Another  requirement  to  the  validity  of  a  guaranty  is  that 
it  shall  be  in    writing,  signed  by  the  party  to  be  charged. 

1  Douslass  V.  Reynolds,  7  Pet.  113;  Lee  v.  Dick,  10  Pet.  482;  Jordanu. 
Dobbins,  122  Mass.  1G8  (23  Am.  Rep.  305);  Gates  v.  McKee,  13  N.  Y.  232 
(64  Am.  Dec. -545)  ;  Lockwood  v.  Crawford,  18  Conn.  3G1 ;  Cremer  v.  Hig- 
ginson,  1  Mason,  323;  Greer  u.  Bush,  57  Miss.  575:  Ranger?;.  Sergeant, 
36  Tex.  26. 

2  Colburn  v.  Averill,  30  Me.  310  (50  Am.  Dec.  630);  Bickford  v.  Gibbs, 
8  Cush.  151;  Drapers.  Snow,  20  N.  Y.  331  (75  Am.  Dec.  408);  Snively  r. 
Johnston,  1  Watts  &  S.  309;  Wyman  v.  Goodrich,  2G  Wi.s.  21 ;  Lamb  v. 
Briggs,  22  Neb.  138  (34  N.  W.  217);  Parkhurst  v.  Vail,  73  111.  343;  Jones 
V.  Kuhn,  34  Kan.  414  (8  P  ^77);  Highland  v.  Dresser,  35  Minn.  345  (29 
N.  W.  55) ;  Star  Wagon  Co.  v.  Swczy,  63  Iowa,  520  (19  N.  W.  298). 

3  Good  V.  Martin,  94  U.  S.  90;  Moies  v.  Bird,  1 1  Mass.  436  (G  Am.  Dec. 
179);  Hawkes?;.  Phillips,  7  Gray,  284;  Evansville  Nat.Bk.  v.  Kaufman,  93 
N.  Y.  273  <^45  Am.  Rep.  20^);  Cowlos  v.  Pick,  55  Conn.  251  (10  A.  669); 
Williams  v.  Williams,  67  lyio.  6G7;  Sypcrt  v.  Harrison,  88  Ky.  461  (11  S. 
W.  435);  Klein  v.  Currier,|l4  111.  237;  Farmer  v.  Perry,  70  Iowa,  358  (30 
N.  W.  762);  Hungerford  v.  O^Brien,  37  Minn.  306  (34  N.  W.  161). 

427 


§    158  SURETIES    AND    GUARANTORS.  [CH.  XV. 

This  is  an  invariable  provision  of  the  Statutes  of  Frauds  in 
the  United  States.  There  is,  however,  a  difference  of 
opinion  as  to  what  kind  of  writingsatisfies  the  requirements 
of  the  statute.  The  courts  are  agreed  that  the  signature 
of  the  party  to  be  charged  must  be  obtained.  In  some 
of  the  States,  it  is  held  that  the  writing  must  contain  a 
statement  of  the  consideration  for  the  guaranty;  not  an 
explicit  statement,  but  sufficient  writing  to  show  the  founda- 
tion for  the  guaranty.^ 

There  are,  however,  cases  in  other  States  which  deny  the 
necessity  even  of  the  acknowledgment  in  writing  of  a  con- 
sideration for  the  guaranty,  leaving  the  want  of  considera- 
tion to  be  shown  by  parol  in  defense  of  the  action  on  the 
ofuarantv.^  And  in  some  of  these  latter  courts,  it  is  held 
that  a  simple  signature  of  the  guarantor,  on  some  part 
of  the  original  instrument  of  indebtedness,  is  a  sufficient 
compliance  with  the  requirements  of  the  Statute  of 
Frauds.^ 

But  the  obligation  must  in  fact,  as  well  as  in  form,  be  a 
promise  to  answer  for  the  debt  of  others,  in  order  that  the 

1  Mayer  v.  Isaacs,  6  M.  &  W.  610;  Douglass  v.  Reynolds,  7  Pet.  113 
(A.  "  might  require  your  aid  from  time  to  lime/'  and  I  promise  "to  be 
res^ponsible  at  any  time  for  a  sum,"  etc.)  ;  Cremer  v.  Higginson,  1  Mason, 
323;  Cowles  v.  Pick,  55  Conn.  251  (10  A.  569);  Ordeman  v.  Lawson,  49 
Md.  135;  Union  N.  Bk.  v.  First  N.  Bk.,  45  Ohio  St,  236  (13  N.  E.  884); 
Parsy  v.  Spikes,  49  Wis.  384  (35  Am.  Rep.  782;  5  N.  W.  794);  Young  v. 
Brown,  53  Wis.  333  (10  N.  W.  394);  Nichols  v.  Allen,  23  Minn.  543; 
Newton  Wagon  Co.  v.  Diers,  10  Neb.  84  (4  N.  W.  995).  In  New  York,  by 
statute  the  existence  of  a  consideration  is  required  to  be  acknowledged 
in  the  writing.  Douglass  v.  Howland,  24  Wend.  35;  Draper  v.  Snow,  20 
N.  Y.  331  (75  Am.  Dec.  408)  ;  Brewster  v.  Silence,  8  N.  Y.  211. 

2  Packard  v.  Richardson,  17  Mass.  122  (9  Am.  Dec.  123);  Sage  v. 
Wilson,  6  Conn.  81 ;  Leonard  v.  Vredenburg,  8  Johns.  29  (5  Am.  Dec. 
317)  ;  Bailey  v.  Freeman,  11  Johns.  221  (6  Am.  Dec.  371) ;  Read  v.  Evans, 
17  Ohio  128;  Violelt  v.  Patten,  5  Cranch,  142. 

3  Moies  V.  Bird,  11  Mass.  436  (6  Am.  Dec.  179);  Perkins  v.  Catlin,  11 
Conn.  213  (29  Am.  Dec.  282);  Nelson  v.  Dubois,  13  Johns.  175;  Pool  v. 
Anderson,  116  Ind.  88  (18  N.  E.  445).  See  Knaus  v.  Major  (Mich.  '97), 
69  N.  W.  489,  as  to  the  binding  effect  of  a  verbal  warranty  that  a  note  is 
good  when  made  by  the  holder.  In  many  of  the  States  such  a  signature 
on  a  bill  or  note,  unexplained,  would  impose  on  the  party  signing  the 
liability  of  an  indorser.     See  ante,  §  92. 

428 


CH.  XV.]  SURETIKS    AND    GUARANTORS.  §   159 

statutory  requirerueiit  of  a  writing  should  apply.  And  it 
has  been  held  that  if  a  debtor  liquidates  his  own  obligation 
by  the  transfer  to  his  creditor  of  another's  bill,  note  or 
check,  verbally  guaranteeing  the  payment  of  the  negotiable 
paper  so  transferred,  it  is  really  a  guaranty  of  the  payment 
of  his  own  debt,  and  is  binding,  although  not  reduced  to 
writing.^ 

§  159.   Guaranty  as  appurtenant  to  a  bill  or  note. —  If 

the  guaranty  of  a  hill  or  note  is  written  on  a  separate  paper, 
it  seems  to  be  well  settled  that  it  will  not  pass  ns  appurte- 
nant of  the  bill  or  note  to  a  subsequent  transferee  of  the  bill 
or  note,  unless  the  guaranty  itself  contains  words  of  nego- 
tiability in  describing  the  persons  to  whom  payment  of  the 
principal  obligation  is  guaranteed.^  But  where  the  guaranty 
is  written  on  the  bill  or  note  without  words  of  negotiabilitv, 
the  authorities  are  divided  on  the  proposition  that  a  subse- 
quent holder  of  the  bill  or  note  may  sue  the  guarantor; 
some  holding  the  affirmative,-^  and  others  sustaining  the 
negative.* 

1  Brown  v.  Curtis,  2  N.  Y.  225;  Cardell  v.  McNiell,  21  N.  Y.  336;  Milks 
V.  Rich,  80  N.  Y.  209  (30  Am.  Rep.  615);  Malone  v.  Keener,  44  Pa.  St. 
107;  Hunt  v.  Adaras,  5  Mass.  358  (4  Am.  D(  c.  68) ;  Thurston  r.  Island,  G 
R.  I.  103;  IIuntiDirton  v.  Wellington,  12  Mich.  10;  Smith  v.  Finch,  3  111. 
21;  Collins  v.  Stanfleld,  138  Ind  184  (38  N.  E.  1091);  Sheldon  v.  Butler, 
24  Minn.  513;  Barker  v.  Scudder,  50  Mo.  272;  Dyer  ».  Gilson,  10  Wis. 
657. 

2  McLnren  v.  Watson's  Ex'r.«,  19  Wend.  557;  20  Wend.  425  (37  Am. 
Dec.  260);  Barlow  v.  Myers,  64  N.  Y.  41  (21  Am.  Rep.  547).  And  see 
First  National  Bank  v.  Carpenter,  41  Iowa,  518. 

3  McLaren  v.  Watson's  Ex'rs,  20  Wend.  425  (37  Am.  Dec.  200);  Cole 
V.  Merchant's  Bank,  GO  Ind.  350;  Gage  v.  Mechanics'  Bk.,  79  111.  62; 
Ellsworth  V.  Harmon,  101  111.  274;  Robinson  v.  Lair,  31  Iowa,  9;  Green 
t;.  Burroughs,  47  Mich.  70;  Heard  v.  Dubuque  Co.  Bk.,8Neb.  10  (30  Am. 
Rep.  811);  Johnson  v.  Mitchell,  50  Tex.  212  (32  Am.  Rep.  002).  Butsee 
Jones  V.  Thayer,  12  Gray,  443  (74  Am.  Dec.  G02) ;  Baldwin  v.  Dow,  130 
Mass.  416. 

*  Trust  Co.  V.  National  Bank,  101  U.  S.  08;  Omaha  Nat.  Bk.  v.  Walker, 
5  Fed.  399;  Bissell  v.  Gowdy,  31  Conn.  47;  Taylor  v.  Binney,  7  Mass. 
479;  Belcher  v.  Smith,  7  Cash.  482;  Jones  v.  Dow,  142  Mass.  130  (7  N.  E. 
839);  Northumberland  Co.  Bk.  v.  Eyer,  58  Pa.  St.  97;  and  see  Tinker  v. 
McCauley,  3  Mich.  188. 

429 


§   160  SURETIES    AND    GUARANTORS.  [CH.  XV. 

§  160.  Demand  of  principal  debtor  and  notice  of 
default  to  guarantor,  when  necessary. —  As  has  been  fully 
explained  in  preceding  sections/  one,  who  becomes  re- 
sponsible for  the  payment  of  a  bill  or  note,  as  a  drawer  or 
indorser,  guarantees  its  payment  only  upon  the  condition 
that  the  bill  or  note  be  presented  to  the  acceptor  or  maker 
at  the  time  of  maturity,  protest  made  for  default  and  notice 
of  dishonor  given  to  such  drawer  or  indorser.  And  if  these 
conditions  have  not  been  complied  with  in  every  particular, 
unless  there  is  a  satisfactory  excuse  for  the  failure  to  so 
comply,  the  drawer  or  indorser  is  completely  discharged 
from  all  secondary  liability,  even  though  it  can  be  shown 
that  no  damage  has  resulted  to  him  from  the  prompt  per- 
formance of  these  conditions  by  the  holder  of  the  bill  or 
note.  And  this  Is  equally  true,  if  the  drawer  or  indorser 
has  become  a  jiarty  to  the  paper  for  the  accommodation  of 
the  principal  debtor  or  other  party  to  the  paper,  and  is  for 
that  reason  properly  described  as  a  surety.  But  where  one 
guarantees  the  payment  of  a  bill  or  note,  without  bringing 
himself  into  the  classification  of  sureties,  i.  e.,  without 
making  himself  a  drawer  or  indorser  of  the  bill  or  note, 
unless  an  express  condition  is  attached  to  his  guaranty,  he 
can  be  held  liable  on  his  guaranty  for  the  default  of  the 
primary  obligor  of  the  bill  or  note,  even  though  demand 
of  payment  and  notice  of  dishonor  have  not  been  made  in 
strict  accordance  with  the  requirements  of  the  law  of  nego- 
tiable paper.  In  any  case,  the  guarautor  is  liable,  if 
demand  has  been  made  of  the  primary  obligor,  and  notice 
of  default  sent  to  the  guarantor,  within  a  reasonable  time 
after  maturity .^     And  even  this  more  or  less  lax  require- 

1  See  §§  84,  130. 

2  Douglass  V.  Reynolds,  7  Pet.  126;  Talbot  v.  Gay,  18  Pick.  535; 
Cowles  V.  Pick,  55  Conn.  251  (10  A.  669);  Cromwell  v.  Hewitt,  40  N.  Y. 
491  (100  Am.  Dec.  527);  Clay  v.  Edgerton,  19  Oliio  St.  549  (2  Am.  Rep. 
422);  Dickerson  v.  Derrickson,  39  III.  577;  Parkhurst  v.  Vail,  73  111. 
343;  Greene  v.  Thompson,  33  Iowa,  293;  Rodabaugh  v.  Pitkin,  46  Iowa, 
544;  Montgomery  v.  Kellogg,  43  Miss.  486  (5  Am.  Rep.  508);  Newton 
Wagon  Co.  v.  Diers,  10  Neb.  285  (4  N.  W.  995).  Wright  v.  Dyer,  48 
Mo.  525. 

430 


CH.  XV.]  SURETIES    AND    GUARANTORS.  §   161 

ment  of  a  demand  and  notice  of  default  is  not  an  absolute 
condition  precedent  to  the  liability  of  the  guarantor.  It 
seems  to  be  a  settled  proposition  of  law  that  the  guarantor 
can  be  held  liable  in  case  of  default  of  the  primary  obligor 
without  proof  of  previous  demand  and  notice  of  default ; 
unless  it  can  be  shown  that  the  guarantor  has  suffered  joint 
damage  by  the  failure  of  the  holder  to  notify  the  guarantor 
of  the  default,  within  a  reasonable  time  after  maturity  of 
the  obligor.  For  example,  the  guarantor  is  liable,  notwith- 
standing the  want  of  notice,  if  tlie  principal  was  insolvent 
at  and  before  maturity  of  the  bill  or  note,  because  it  is  pre- 
sumed that  the  guarantor  has  suffered  nothing  in  that  case 
from  the  failure  to  give  notice  of  the  default.^ 

§  161.  Concealed  sureties  as  accommodation  parties  — 
Nature  of  tlieir  liability  —  Admissibility  of  parol  evi- 
dence to  prove  real  character. —  If  the  accomn^odation 
party  to  commercial  paper,  whether  he  be  drawer  or 
acceptor  of  a  bill,  maker  of  a  note,  or  indorser  of  either, 
affixes  the  word  surety  to  his  signature,  he  must  undoubt- 
edly be  treated  as  surety  by  all  the  subsequent  holders  of 
the  paper.2 

But  whether  his  real  character  as  surety  can  be  shown 
by  parol  evidence,  where  it  has  been  concealed  or  at  least 
not  disclosed  in  the  bill  or  note,  is  differently  decided  by 
the  different  courts;  and  the  ruling  is  different,  according 
to  the  effect  of  the  disclosure  of  the  real  chaiacter  of  the 
party  as  surety  on  the  rights  of  the  other  parties  to  the 
instrument.  If  a  concealed  suiety  appears  as  a  regular 
acceptor  or  indorser,  while  a  few  cases  in  the  United  States 
hold  to  the  English  equitable  rule  that  parol  evidence  is 

'  150X001(18  V.  Douglass,  12  Pet.  497;  Louisville  Mfg.  Co.  v.  Welch, 
10  How.  4(;i;  Oxford  Bank  v.  Ilaynes,  8  Pick.  423  (19  Am.  Dec.  334); 
Breed  v.  Ilillhouse,  7  Conn.  523;  Brown  v.  Curtis,  2  N.  Y.  225;  Allen  r. 
Righlmere,  20  Johns.  3G5  (11  Am.  Doc.  288);  Hance  v.  Miller,  21  111. 
C36;  Vollz  V.  Harris,  40  111.  155;  Hungerford  v.  O'Brien,  37  Minn.  30G 
(34  N.  W.  101)  ;  Wright  v.  Dyer,  48  Mo.  525;  Fuller  v.  Scott,  8  Kan.  25. 

~  Hunt  V.  Adams,  5  Muss.  358  (4  Am.  Dec.  C8) ;  Sayles  v.  Sims,  73  N. 
Y.  551;  Culbertson  v.  Wilcox,  11  Wash.  St.  522  (39  P.  954). 

431 


§   162  SURETIES    AND    GUARANTORS.  [CH.  XV. 

admissible  to  prove  the  party's  ciiaracter  as  surety,  as 
against  all  parties  who  know  the  fact  (but  not  as  a  bona 
fide  holder)  ;  ^  the  great  weight  of  judicial  opinion  follow 
the  English  common  law  rule,  which  permits  the  subsequent 
holder  of  a  bill  or  note  to  treat  all  the  prior  parties  accord- 
ing to  their  ostensible  character,  and  deny  the  admissibility 
of  parol  evidence  to  prove  their  real  character,  where  it  would 
completely  change  the  character  of  a  party  to  the  paper. ^ 
But  it  seems  that,  if  the  concealed  surety  a))pearsas  a  joint 
maker  or  drawer,  so  that  proof  of  his  character  as  surety 
would  not  reverse  the  ostensible  relations  of  the  parties, 
the  general  trend  of  judicial  opinion  in  this  country  per- 
mits the  proof  of  his  real  character  by  parol  evidence, 
with  the  accompanying  moditication  of  the  rights  of  the 
parties.^ 

§  162.  What  will  discharge  guarantors  and  sureties — 
Surrender  of  teecurities  and  extension  of  time  of  pay- 
ment.—  In  explaining  what  will  discharge  guarantors  and 
sureties,  it  must  always  be  borne  in  mind,  that  where  the 
character  of  a  surety  is  concealed  by  his  appearance  as  a 
regular  party  to  a  bill  or  note,  his  rights  and  his  liabilities, 
as  against  a  bona  fide  holder,  are  determined  by  his  osten- 

1  Guild  V.  Butler,  127  Mass.  386;  Rand  v.  Cutler,  155  Mass.  451  ^29 
N.  E.  1085) ;  First  Nat.  Bk.  v.  Gaines,  87  Ky  597  (9  S.  W.  396)  ;  Cone  v. 
Rees,  11  Ohio  C.  C.  632;  Meggett  v.  Baura,  57  Miss.  22;  Benedict  v. 
Olson,  37  Minn.  431  f35  N.  W.  10);  Stump  v.  Richardson  Co.  Bk.,  24 
Neb.  522  (89  N.  W.  433). 

2  Harris  v.  Brooks,  21  Pick.  195  (32  Am.  Dec.  254) ;  White  t>.  Hopkins, 
8  Watts  &S.  99  (37  Am.  Dec.  542)  ;  Bk.  of  Montgomery  v  Walker,  9  Serg. 

6  R.  229  (11  Am.  Dec.  709);  s.  c.  12  Serg.  &.  R.  382;  Stephens  v.  Monon- 
gahela,  88  Pa.  St.  157  (32  Am.  Rep.  438)  ;  Clopper's  Adm'r  v.  Union  Bk., 

7  Har.  &  J.  92  (16  Am.  Dec.  294);  Lambert  v.  Sandford,  2  Blackf.  137 
(18  Am.  Dec.  149) ;  DeWitt  v.  Boring,  123  Ind.  4  (23  N.  E.  1085)  ;  Yates 
V.  Donaldson,  5  Md.  389  (61  Am.  Dec.  283)  ;  Scott  v.  Taul  (Ala.  '97),  22 
So.  447;  Cronise  v.  Kellogg,  20  111.  11;  Culbertson  v.  Wilcox,  11  Wash. 
St.  522   (39  P.  954). 

3  Hubbard  v.  Gurney,  64  N.  Y.  457;  Saylesv.  Sims,  73  N.  Y.  551;  Bar- 
ron u.  Cady,  40  Mich.  259;  Goodman  v.  Litaker,  84  N.  C.  8  (37  Am.  Rep. 
602);  Stillwell  v.  Aaron,  69  Mo.  539  (33  Am.  Rep.  517)  ;  Irvine  v.  Adams, 
48  Wis.  468  (33  Am.  Rep.  817). 

432 


CII.  XV.]  SURETIES    AND    GUARANTORS.  §    162 

srble,  rather  than  his  real,  character.  Of  course,  it  is  not 
possible  for  the  guarantor,  as  distinguished  from  a  surety, 
to  masquerade  in  any  other  character. 

In  the  first  place,  whatever  discharges  the  principal 
debtor,  will  likewise  discharge  the  guarantor  and  surety ; 
whether  it  be  a  payment,  release,  or  the  successful  estab- 
lishment of  a  defense  to  an  action  on  the  bill  or  note,  such 
as  illegality  or  fiaud.^ 

In  the  second  j^lcce,  the  guarantor  or  surety  will  be  dis- 
charged from  liability,  if  his  signature  has  been  procured 
by  fraud  or  misrepresentation,  or  the  bill  or  note  has  been 
diverted  from  its  expressed  purpose,  or  its  terms  altered  in 
any  material  degree,  with  or  without  the  cognizance  of  the 
principal  debtor.  These  defenses,  however,  will  not  avail 
the  guarantor  or  surety  as  against  a  bona  fide  holder. ^ 

Finally,  the  guarantor  or  surety  is  discharged,  if  the 
holder  surrenders  to  the  principal  debtor  or  other  party  to 
the  paper  collateral  securities,  which  he  holds  as  security 
for  the  guaranteed  debt ;  or  enters  into  a  binding  contract 
for  the  extension  of  the  time  of  payment,  without  the  con- 
sent of  such  guarantor  or  surety.     Under  the  principle  of 

1  Durham  v.  Giles,  52  Me.  206;  Sargent  v.  Appleton,  6  Mass.  85  (4  Am. 
Dec.  90);  Day  v.  Jones,  150  Mass.  231  (22  N.  E.  898);  Couch  v.  Waring, 
9  Conn.  261;  Putnam  v.  Schuyler,  4  Hun,  166  (but  see  McWilliams  v. 
Mason,  31  N.  Y.  294);  Storer  v.  Milliken,  85  111.  218;  Griffith  v.  Sit- 
greaves,  90  Pa.  St.  161 ;  Aultman  &  Taylor  Co.  v.  Hefner,  67  Tex.  54  (2  S. 
W.  861);  Es^emann  v.  Henschen,  56  Mo.  123.  But  see  Carver  v.  Steele, 
116  Cal.  116  (47  P.  1007),  where  it  is  held  that  loss  of  remedy  against 
maker  of  a  note  does  not  discharge  a  surety.  And  so,  also,  a  surety  is 
nevertheless  liable,  although  the  principal  is  a  married  woman,  and  she 
successfully  sets  up  the  defense  of  want  of  legal  authority  to  make  a 
contract.  Davis  v.  Statts,  43  Ind.  103  (13  Am.  Rep.  382);  Sample  v. 
Cochran,  82  Ind.  260;  Allen  v.  Berryhill,  27  Iowa,  534  (1  Am.  Rep.  309). 

2  Harris  v.  Brooks,  21  Pick.  195  (32  Am.  Dec.  254)  ;  Packard  v.  Her- 
rington,  41  Kan.  469  (21  P.  621);  Owens  v.  Tague,  3  Ind.  App.  245; 
Johnson  v.  Mitchell,  14  Colo.  227  (23  P.  452) ;  Anderson  v.  Warne,  71  111. 
20  (22  Am.  Rep.  83);  Peteflsh  v.  Watkins,  124  111.  384  (16  N.  E.  248); 
North  Atchison  Bk.  v.  Gay,  114  Mo.  203  (21  S.  W.  479);  St.  Louis  Nat. 
Bk.  V.  Flanagan,  129  Mo.  178  (31  S.  W.  773)  ;  Melick  v.  First  Nat.  Bk.,  52 
Iowa,  94  (2  N.  W.  1021);  Galbraith  v.  Townsend,  1  Tex.  Civ.  App.  447; 
20  S.  W.  943;  Merchants'  Exch.  Bk.  v.  Luckow,  37  Minn.  542  (35  N.  W. 
434). 

28  433 


§  162  SURETIES    AND    GUARANTORS.  [CH.  XV, 

subrogation,  the  guarantor  or  surety  has  a  vested  interest 
in  the  collateral  security,  which  cannot  be  jeopardized  or 
destroyed  without  his  discharge  from  his  liability.^  But, 
unless  the  holder  of  a  bill  or  note  has  agreed  to  use  due 
diligence  in  suing  the  principal,  or  there  is  a  statute  re- 
quiring it,  mere  delay  in  suing  the  principal  will  not  dis- 
charge the  surety  or  guarantor,  as  long  as  the  Statute  of 
Limitations  does  not  bar  the  cause  of  action. ^  The  agree- 
ment for  an  extension  of  the  time  of  payment  must  not 
only  be  based  upon  a  valuable  executed  consideration  of 
some  sort,^  but  the  agreement  must  be  absolute  and  for 
an  extension  of  payment  for  a  definite  period  of  time.  It 
is  not  the  length  of  time,  but  its  definiteness  which  dis- 
charges the  guarantor  or  surety.^ 

1  Otis  V.  Van  Storch,  15  R.  I.  41  (.23  A.  39)  ;  Hayes  v  Ward,  4  Johns. 
Ch.  123  (8  Am.  Dec.  554);  Paine  v.  Johnson,  76  N.  Y.  274;  Millerd  v. 
Thorn,  56  N.  Y.  402;  Sloan  v.  Latimer,  41  S.  C.  217  (19  S.  E.  491)  ; 
Freanor  v.  Yingling,  37  Md.  491;  Galbraith  v.  Townsend,  1  Tex.  Civ, 
App.  477;  Holland  v.  Johnson,  51  Ind.  346;  Barrett  v.  Davis,  104  Mo. 
549  (16  S.  W.  377);  Kirkpatrick  v.  Howk,  80  111.  122;  Dillon  v.  Russell, 
5  Neb.  484.     But  see  Sheehan  v.  Taft,  110  Mass.  331. 

2  Berry  v.  Pullen,  69  Me.  191  (31  Am.  Rep.  248);  Salt  Springs  Nat. 
Bank  v.  Sloan,  135  N.  Y.  371  (32  N.  E,  231) ;  Chatham  Nat.  Bank  v.  Pratt, 
135  N.  Y.  423  (32  N.  E.  236);  Chafoin  v.  Rich,  77  Cal.  476  (19  P.  882); 
Sterling  v.  Marietta  Co.,  11  Serg.  &  R.  179;  Coffey  v.  Reinhardt,  114  N. 
C.  509  (19  S.  E.  370);  Farmers'  Bk.  v.  Reynolds,  13  Ohio,  84;  Hibler  v. 
Shipp,  78  Ky.  64;  Sawyer  v.  Bradford,  6  Ala.  572;  Osborne  v.  Thompson, 
36  Minn.  528  (33  N.  W.  1);  Butler  v.  Gambs,  1  Mo.  App.  466. 

3  Billington  v.  Wagoner,  33  N.  Y,  31;  Ducker  v.  Rapp,  67  N.  Y.  464; 
Scott  V.  Harris,  76  N,  C.  205;  Whittraer  v.  Ellison,  72  111,  301 ;  Bradshaw 
V.  Combs,  102  111.  428;  Roberts  v.  Richardson,  39  Iowa,  290;  Abel  v. 
Alexander,  45  Ind.  523  (15  Am.  Rep.  270);  Foster  v.  Gaston,  123  Ind.  96 
(23  N.  E.  1092);  Irvine  v.  Adams,  48  Wis.  467  (33  Am.  Rep.  817;  4  N. 
W.  573);  Cosetllo  v.  Wilhelm,  13  Kan,  229;  Wild  v.  Howe,  74  Mo,  551. 
But  mere  part  payment  of  the  debt  or  payment  of  past  due  interest,  will 
not  raise  the  presumption  of  an  agreement  for  extension  of  time  of 
payment.  Nor  is  it  a  sufficient  consideration  to  make  the  agreement 
binding.  First  Nat,  Bk.  v.  Leavitt,  65  Mo,  563;  Petty  v.  Douglass,  76 
Mo.  70;  Wilson  v.  Powers,  130  Mass.  127;  Turnbull  v.  Brock,  31  Ohio 
St.  649;  Stuber  v.  Schack,  S3  111,  191. 

4  Day  V.  Jones,  150  Mass.  231  (22  N.  E.  898);  Reed  v.  Stoddard,  100 
Mass,  425;  Fellows  v.  Prentiss,  3  Denio,  512  (45  Am.  Dec.  484)  ;  Sizer  v. 
Heacock,  23  Wend,  81 ;  McKechnie  v.  Ward,  58  N,  Y.  541  (17  Am.  Rep,, 
281) ;  Coales  v.  Thayer,  93  Ind.  156;  Rowset;.  Johnson,  66  Mo.  Apy..  57, 

434 


CII.   XV.]  SURETIES    AND    GUARANTORS.  §    IHS 

§  163.  Remedies  of  surety  and  guai*aiitor  —  Contribu- 
tion between  co-sureties. —  If  a  guarantor  or  surely  is 
required  to  pay  the  bill,  note  or  check,  which  he  guaran- 
tees, he  has,  as  against  his  principal  and  the  creditor,  one 
of  two  courses  to  pursue.  The  more  common  course,  per- 
haps, is  for  him  to  pay  the  debt  and  recover  of  the  princi- 
pal and  all  other  parties  whom  the  holder  may  have  held 
liable.  But  his  claim  against  the  principal  and  others,  is 
limited  to  the  amount  which  he  has  been  required  to  pay 
and  has  actually  paid,  to  secure  his  own  release  from 
liability  ;  with  interest  on  the  same,  and  whatever  costs  of 
suit  have  been  incurred  in  resisting  the  enforcement  of  the 
claim ;  and  the  suit  must  be  brought  within  the  statutory 
period  of  limitation.^ 

On  the  other  hand,  the  guarantor  or  surety  may  file  a 
bill  in  equity,  making  the  creditor  and  principal  parties,  to 
enjoin  proceedings  against  himself,  until  the  remedies 
against  the  principal  have  first  been  exhausted.  But  the 
guarantor  or  surety  would  in  such  a  case  have  to  indemnify 
the  creditor  against  loss  by  the  delay  in  the  proceedings 
against  him  thereby  occasioned.  This  is  an  unusual  j^ro- 
ceeding;  because,  ordinarily,  the  interests  of  the  guarantor 
or  surety  can  be  as  well  promoted  by  his  payment  of  the 
debt  and  recovery  of  the  principal.'^ 

If  there  are  two  or  more  guarantors  or  sureties,  they  are 

Sloan  V.  Latimer,  41  S.  C.  217  (19  S.  E.  491);  Smith  v.  Sheldon,  35  Mich. 
42  (24  Am.  Rep.  529)  ;  Booth  v.  Wiley,  102  111.  84;  Gardner  v.  Watson,  13 
111.  347;  Jaffray  v.  Crane,  50  Wis  349  (7  N.  W.  300);  Morgan  v.  Thomp- 
son, GO  Iowa,  280  (14  N.  W.  30i;).  The  substitution  of  a  demand  note  f>>r 
original  note  has  been  held  to  be  no  such  extension  of  time  of  pay- 
ment as  will  discharge  guarantors  and  sureties.  Peninsular  Sav.  Bank 
V.  Ilosie  (Mich.  '97),  70  N.  W.  890. 

1  Hall  V.  Smith,  5  How.  90;  Swift  v.  Crocker,  21  Pick.  241;  Hale  v. 
Andrews,  G  Cow.  225;  Bonney  r.  Seeley,  2  Wend.  481;  Beckley  v.  Mun- 
son,  13  Conn.  299;  Pace  v.  Robertson,  G5  N.  C.  650;  Junker  v.  Rush,  136 
111.  179  (2G  N.  E.  499) ;  Smith  v.  Sheldon,  35  Mich.  42  (24  Am.  Rep.  529) ; 
Beck  with  v.  Webber,  78  Mich.  390  (44  N.  W.  330).  See  Krugman  v. 
Soule,  132  Mass.  285. 

-  King  V.  Baldwin,  17  Johns.  384  (8  Am.  Dec.  415);  Irick  v.  Black,  17 
N.  J.  Eq.  (2  C.  E.  Gr.)  189;  Humphrey  v.  Hitt,  G  Gratt.  509  (53  Am. 
Dt'C.  133). 

435 


ILL.  CAS.      CONSIDERATION  SLPl'OKTING  GUARANTY.       [CH.  XV. 

presumed  to  be  co-equal  guarantors  or  sureties;  uud  if  one 
of  them  is  required  to  pay  the  debt,  he  can  compel  the 
other  to  make  contribution  in  equal  proportions,  unless 
their  liability  to  each  other  for  contribution  has  been 
otherwise  determined  by  express  agreement  between  them. 
But  contribution  can  be  enforced,  only  when  one  has 
actually  paid  more  than  his  share  of  the  debt.^ 

Successive  indorsers  are  never  held  to  be  co-sureties,  and 
liable  to  each  other  for  contribution,  where  they  do  not 
guarantee  the  payment  of  the  bill  or  note  to  the  same 
original  party.  But  where  two  parties  indorse  a  bill  or 
note  for  the  same  party,  they  are  co-sureties,  and,  in  the 
absence  of  an  agreement  to  the  contrary,  are  liable  for 
contribution. 2 


ILLUSTRATIVE   CASES. 

Moses  V.  Lawrence  County  Bank,  149  U.  S.  298. 

North  Atchison  Bank  v.  Gay,  114  Mo.  203  (21  S.  W.  479). 

Sloau  V.  Latimer,  41  S.  C.  217  (.19  S.  W.  491). 

Salt  Springs  Nat.  Bank  v.  Sloan,  135  N.  Y.  371  (32  N.  E.  231) . 

Rogers  v.  School  Trustees,  46  111.  428. 

Guaranties  Contemporaneous  and  Subsequent,  Must  be 
Supported  by  Consideration  —  When  Separate  Consid- 
eration is  Necessary. 

Moses  V.  Lawrence  County  Bank,  149  U.  S.  298. 

This  was  an  action,  brouglit  April  16,  1888,  by  a  national  bank, 
organized  under  the  acts  of  Congress,  and  doing  business  in,  and 
a  citizen  of  Pennsylvania,  against  six  persons,  citizens  of  Ala- 
bama and  residing  in  the  middle  district  of  Alabama,  to  recover 
the  amount  due  on  a  guaranty  of  a  promissory  note. 

1  Fletcher  v.  Jackson,  23  Vt.  581  (56  Am.  Dec.  98);  Stump  v.  Richard- 
son County  Bk.,  24  Neb,  522;  39  N.  W.  433  (one  a  concealed  surety); 
Johnson  v.  Harvey,  84  N.  Y.  363  (38  Am.  Rep.  515) ;  Norton  v.  Coons, 
G  N.  Y.  33;  Southerland  v.  Freemont,  107  N.  C.  565  (12  S.  E.  237); 
Monson  v.  Drakely,  40  Conn.  552  (16  Am.  Rep.  74);  Eiseley  v.  Harr,  42 
Neb.  3  (64  N.  W.  365)  ;  Voss  v.  Lewis,  126  Ind.  155  (25  N.  E.  892) ; 
Houck  V.  Graham,  123  Ind.  277;  24  N.  E.  113  (agreement  controlling  con- 
tribution). See  Robertson  v.  Deatherage,  82  111.  511;  McKee  v.  Camp- 
bell, 27  Mich.  497. 

2  Philips  V.  Preston,  5  How,  278;  Briggs  v.  Boyd,  37  Vt.  534;  Steckel 
V.  Steckel,  28  Pa.  St.  233.     See  ante,  §  86. 

436 


CH.  XV.]      CONSIDERATION  SUPPORTING  GUARANTY.      ILL.  CAS. 

The  complaint  alleged  that,  on  August  15,  1887,  the  Sheffield 
Furnace  Company,  an  Alabama  corporation,  made  a  promissory 
note  for  $12,111.51,  payable  to  its  own  order  four  months  after 
date  at  the  banking  house  of  Moses  Brothers,  in  Montgomery ; 
that  contemporaneously  with  the  making  of  the  note,  and  before 
its  delivery  or  negotiation,  and  in  order  to  give  it  credit  and  cur- 
rency, its  payment  at  maturity  was  guaranteed  by  the  defendants, 
for  a  valuable  consideration,  by  an  indorsement  in  writing  on  tlie 
note  in  these  words:  "  We  hereby  guarantee  the  payment  of  the 
note  at  maturity,"  signed  by  the  defendants,  and  which  was  in- 
tended by  them  to  induce,  and  which  in  fact  induced,  James  P. 
Witherow  and  all  others  to  whom  the  note  and  guaranty  were 
offered  for  negotiation  and  sale,  to  take  the  note  and  guaranty 
and  to  give  value  therefor;  that  the  note,  with  the  guaranty 
thereon,  was  before  its  maturity  duly  indorsed  for  value  by  the 
Sheffield  Furnace  Company  to  the  order  of  Witherow  ;  that  after- 
ward, and  before  the  maturity  of  the  note  and  guaranty,  Witheiow 
indorsed  the  note,  guaranteed  as  aforesaid,  to  the  plaintiff  for 
value;  that  afterward,  and  before  the  maturity  of  the  note  and 
guaranty,  the  defendants  indorsed  in  writing  on  the  note  their 
waiver  of  note  and  protest  and  notice  ;  that  the  note  was  not  paid 
at  maturity,  and  that  the  note  and  guaranty  remained  unpaid  and 
the  property  of  the  plaintiff. 

The  defendant  pleaded  twelve  pleas,  of  which  the  only  ones 
material  to  be  stated  were  as  follows :  — 

Fourth.  That  the  guaranty  sued  on  was  a  special  promise  to 
answer  for  the  debt  of  another,  and  did  not  express  any  consider- 
ation for  the  promise. 

Fifth.  That  the  note  was  given  by  the  Sheffield  Furnace  Com- 
pany for  a  debt  owing  to  Witherow  liefore  it  was  made,  and  was 
not  founded  upon  a  consideration  paid  or  liability  accrued  at  the 
time  of  the  making  thereof,  and  the  guaranty  was  without  any 
consideration. 

Eiglitli.  That  the  Sheffield  Furnace  Company  paid  the  debt  sued 
on  to  Witherow  before  this  action  was  commenced. 

Twelfth.  That  the  guaranty  sued  on  was  a  S[)ecial  promise  to 
answer  for  the  debt  of  another,  and  did  not  express  any  consid- 
eration therefor,  and  was  not  executed  contemi)oraneously  with, 
nor  before  the  negotiation  of,  the  note  of  which  it  guaranteed 
the  payment. 

The  plaintiff  demurred  to  the  fourtli  and  fifth  i)leas,  because 
they  did  not  deny  that  the  defendants  indorsed  the  guaranty  upon 
the  note  contem[)oraneously  with  its  execution  and  before  any 
negotiation  thereof;  and  also  demurred  to  these  pleas,  as  well  as 
to  the  twelfth,  because  they  did  not  deny  that  the  defendant  in- 
dorsed the  gu:iranty  upon  the  note  before  its  negotiation  to  the 
plaintiff  and  in  order  to  give  it  credit  and  currency,  nor  allege 
that  tlie  plaintff  had  notice  of  any  want  of  consideration  for  the 
guaranty. 

To  the  eighth  plea  a  roplication  was  filed,   alleging  that  the 

437 


ILL.  CAS.      CONSIDERATION  SUPPORTING  GUARANTY.      [CH.  XV. 

plaintiff  became  the  owner  of  the  note  for  a  valuable  considera- 
tion before  maturity,  and  that  no  part  thereof  had  ever  been  paid 
to  the  plaintiff  or  to  any  one  authorized  by  the  plaintiff  to  receive 
it.     To  this  replication  the  defendant  demurred. 

The  court  sustained  the  demurrers  to  the  pleas,  and  overruled 
the  demurrer  to  the  replication. 

Issue  was  then  joined  on  the  eighth  plea  and  the  replication 
thereto;  and  a  trial  by  jury  was  had  upon  that  issue,  at  wliich 
the  plaintiff  gave  in  evidence  the  note,  purporting  to  be  "  for 
value  I'eceived,"  and  the  following  indorsements  thereon,  in  the 
order  in  which  they  appeared  upon  the  note:  1st.  "Pay  to  the 
order  of  J.  P.  Witherow,"  signed  by  the  Sheffield  Furnace  Com- 
pany. 2d.  An  indorsement  in  blank  by  Witherow.  3d.  "We 
hereby  guarantee  the  payment  of  this  note  at  maturity,"  signed 
by  the  defendants.  4th.  Another  blank  indorsement  by  Withe- 
row under  the  guaranty.  No  other  evidence  was  introduced. 
Thereupon  the  court  instructed  the  jury  to  render  a  verdict  for 
the  plaintiff  for  the  amount  sued  for,  with  interest ;  a  verdict  was 
returned  accordingly;  and  the  defendant,  having  duly  excepted 
to  the  evidence  and  to  the  instruction,  tendered  a  bill  of  exceptions 
and  sued  out  this  writ  of  error. 

Mr.  Justice  Gray.  By  the  Statute  of  Frauds  of  Alabama,  a 
special  promise  to  answer  for  the  debt,  default,  or  miscarriage  of 
another  is  void  "  unless  such  agreement,  or  some  note  or  memo- 
randum thereof,  expressing  the  consideration,"  is  in  writing,  and 
subscribed  by  or  in  behalf  of  the  party  to  be  charged :  Alabama 
Code  of  1887,  §  1732.  The  words  "value  received,"  or 
acknowledging  the  receipt  of  one  dollar,  sufficiently  expressing  a 
consideration.  Neal  v.  Smith,  5  Ala.  568  ;  Boiling  v.  Munohus, 
65  Ala.  658. 

Every  negotiable  promissory  note,  even  if  not  purporting  to  be 
"for  value  received,"  imports  a  consideration.  Mandeville -y. 
Welch,  5  Wheat.  277  ;  Page  v.  Bank  of  Alexandria,  7  Wlieat.  35  ; 
Townsend  v.  Derby,  3  Met.  363.  And  the  indorsement  of  such 
a  note  is  itself  prima  facie  evidence  of  having  been  made  for 
value.     Riddle  v.  Mandeville,  5  Cranch,  322,  332. 

The  promissory  note,  in  the  case  at  bar,  having  been  made 
payable  to  the  maker's  own  order,  first  took  effect  as  a  contract 
upon  its  indorsement  and  delivery  by  the  maker,  the  Sheffield 
Furnace  Company,  to  Witherow,  the  first  taker.  Lea  v.  Branch 
Bank,  8  Porter,  119;  Little  y.  Rogers,  1  Met.  108;  Hooper  v. 
Williams,  2  Exch.  13;  Brown  v.  DeWinton,  6  C.  B.  336. 

A  guaranty  of  the  payment  of  a  negotiable  promissory  note, 
written  by  a  third  person  upon  the  note  before  its  delivery, 
requires  no  other  consideration  to  support  it,  and  need  express 
none  other  (even  where  the  law  requires  the  consideration  of  the 
guaranty  to  be  expressed  in  writing),  than  the  consideration 
which  the  note  upon  its  face  implies  to  have  passed  between  the 
original  jiarties.  Leonard  v.  Vredenburgh,  8  Johns.  29  ;  D'Wolf 
V.  Rabaud,  1  Pet.  476,  501,  502;  Nelson  v.  Boynton,  3  Met.  396, 

438 


CH.  XV.]      CONSIDERATION  SUPPORTING  GUARANTY.      ILL.  CAS. 

400,  401;  Bickford  v.  Gibbs,  8  Cush.  154;  Nabb  v.  Koontz,  17 
Md.  283;  Parkburst  v.  Vail,  73  III.  343. 

The  demurrers  to  tbe  fourth  and  fifth  pleas,  therefore,  were 
rightly  sustained. 

But  a  guaranty  written  upon  a  promissory  note,  after  the  note 
lias  been  delivered  and  taken  effect  as  a  contract  requires  a  dis- 
tinct consideration  to  support  it;  and  if  such  a  guaranty  does 
not  express  any  consideration,  it  is  void,  where  the  Statute  of 
Frauds,  as  in  Alabauia,  requires  the  consideration  to  be  expressed 
in  writing.  Leonard  v.  Vredenburgh,  and  other  cases,  above. 
Rigby  V.  Norwood,  34  Ala.  129. 

The  demurrer  to  the  twelfth  plea,  therefore,  should  have  been 
overruled,  and  judgment  rendered  tiiereon  for  the  defendant, 
unless  the  court  saw  fit  to  permit  the  plaintiff  to  file  a  replication 
to  that  plea. 

It  was  argued  on  behalf  of  the  original  plaintiff  that  the  valid- 
ity and  effect  of  the  guaranty  must  be  governed  by  the  general 
commercial  law,  without  regard  to  any  statute  of  Alabama.  But 
there  can  be  no  doubt  that  the  Statute  of  Frauds,  even  as  applied 
to  commercial  instruments,  is  such  a  law  of  the  State  as  has  been 
declared  by  Congress  to  be  a  rule  of  decision  in  the  courts  of  the 
United  States.  Act  of  September  24,  1789,  c.  20,  §  34,  1  Stat. 
92;  Rev.  Stat.,  §  721;  Mandevillc  ?;.  Riddle,  1  Cranch,  290,  and 
5  Cranch,  322;  D'Wolf^.  Rabaud,  1  Pet.  476;  Kirkman  v.  Ham- 
ilton, 6  Pet.  20 ;  Brashear  v.  West,  7  Pet.  G08 ;  Paine  v.  Central 
Vermont  R.  R.,  118  U.  S.   152,  IGl. 

It  was  also  contended  that  the  order  sustaining  the  demurrers, 
if  erroneous,  did  not  prejudice  the  defendant,  because  lie  might 
have  availed  himself  of  the  defense  of  the  Statute  of  Frauds  under 
the  general  issue.  That  might  have  been  true,  if  he  had  pleaded 
the  general  issue.  Kannady -y.  Lambart,  37  Ala.  57;  Pollock  v. 
Brush  Electric  Association,  128  U.  S.  446.  But  he  did  not  plead 
it,  and  had  the  right  to  rely  on  his  special  uleas  only.  Alabama 
Code,  §  2675. 

The  suggestion  of  counsel,  that  by  the  practice  in  Alabama  the 
entry  of  an  appearance  of  counsel  for  the  defendant  was  equiva- 
lent to  filing  a  plea  of  the  general  issue,  is  too  novel  to  be  ac- 
cepted without  proof,  and  seems  inconsistent  with  Grigg  v. 
Gilmer,  54  Ala.  425.  If  the  record  did  not  show  what  the  plead- 
ings were,  it  might  be  presumed  that  the  general  issue  was 
pleaded.  May  v.  Sharp,  49  Ala.  140  ;  Hatchett  v.  Molton,  76  Ala. 
410.  But  in  this  case  tw*.  Ive  pleas  are  set  forth  in  the  record, 
and  it  cannot  be  assumed  that  there  was  any  other. 

The  eighth  plea  was  payment.  The  defendant  introduced  no 
evidence  to  support  this  plea,  and  has,  therefure,  no  ground  of 
exception  to  the  rulings  and  instruction  at  the  trial  of  the  issue 
joined  thereon. 

But  the  erroneous  ruling  on  the  demurrer  to  the  twelfth  plea  re- 
quires the  judgment  to  be  reversed,  and  the  case  remanded  to  the 
circuit  court  for  further  proceedings  inconformity  with  tliis  opinion. 

4.S0 


ILL.  CAS.  WRONGFUL   NEGOTIATION.  [CH.  XV. 


Liability  of  Surety  on  Note  which  is  Jfegotiated  in  Vio- 
lation of  Agreement  that  Other  Sureties  were  to  be 
Obtained. 

North  Atchison  Bank  v.  Gay,  114  Mo.  203  (21  S.  W.  479). 

Gantt,  p.  J.  This  suit  was  instituted  against  Will  R.  Gay,  as 
principal,  and  David  Gordon  and  Samuel  May,  as  sureties,  on 
the  following  written  instrument:  "  $2,500.00.  Westboro,  Mo., 
October  10th,  1888.  Ninety  days  afterdate  we  promise  to  pay  to 
the  order  of  North  Atchison  Bank  twenty-five  hundred  dollars,  for 
value  received,  with  interest  from  maturity  at  the  rate  of  ten  per 
cent  per  annum,  together  with  an  attorney's  fee  often  per  cent  of 
the  whole  amount  due,  if  collected  by  attorney  or  process  of  law. 
Will  R.  Gay.  David  Gordon.  Samuel  May.  Payable  at  North 
Atchison  Bank,  Westboro,  Mo."  Defendants  Will  R.  Gay  and 
Samuel  May  suffered  judgment  against  them  by  default.  Defend- 
ant Gordon  filed  a  separate  answer,  in  which  he  admitted  signing 
the  note,  but  denied  its  deliveiy,  admitted  the  incorporation  of 
plaintiff,  and  then  pleaded  the  following  special  defenses,  to  wit, 
that  said  plaintiff  never  paid  or  surrendered,  in  any  manner,  any 
money  or  valuable  consideration  whatever  for  said  instrument ; 
that  Gay  represented  that  it  was  a  note  for  only  $2,500;  that  it 
would  be  promptly  paid  at  maturity,  and  that  before  it  was 
delivered  one  A.  B.  Wilkinson  and  three  solvent  sureties  would 
sign  it  also,  and  not  having  his  glasses,  and  relying  on  Gay,  he 
signed  the  note  ;  that  these  representations  were  all  false,  and  in 
violation  of  said  agreement  the  note  was  delivered  by  Gay.  He 
also  alleges  a  contract  with  plaintiff  not  to  accept  paper  with  his 
name  on  it  unless  there  were  other  solvent  sureties  also.  He 
also  charged  that  Gay  turned  over  collateral  securities  sufficient, 
to  plaintiff,  to  pay  said  note,  and  asks  that  it  be  compelled 
to  credit  it.  Finally,  he  charges  that  plaint'ff  knew  Gay  was 
insolvent,  and  did  not  expect  said  note  to  be  paid  by  Gay,  when 
it  took  it,  and  that  Gay  turned  over  to  plaintiff  ail  his  available 
property  at  the  time,  and  this  was  a  fraud  on  defendant.  Plain- 
tiff denied  all  fraud,  and  all  knowledge  of  the  agreement  for  other 
sureties.  The  cause  was  tried  to  a  jury  under  instructions  of  the 
court.  The  plaintiff,  to  maintain  its  case,  introduced  the  instru- 
ment in  writing  in  evidence,  and  rested  its  case.  Defendant  Gor- 
don then  testified,  in  substance,  that  on  the  17th  October,  1888, 
he  drove  into  Westboro,  to  a  livery  stable  ;  that,  as  he  drove  up, 
Gay  and  Peck,  the  cashier  of  the  pbiniiff  bank,  were  standing  on 
the  sidewalk.  He  heard  Gay  say  to  Peck,  "  '  Will  Uncle  Dave  be 
good  on  the  note?  '  Peck  run  both  hands  in  his  pocket,  and 
walked  off."  Gay  approached  and  requested  him  to  sign  a  note 
for  $2,500.  He  said  he  could  not  do  it,  but  Gay  insisted  it 
would  be  a  great  accommodation ;  that  five  other  good  sureties 
would  sign.  Thereupon  he  went  into  plaintiff's  bank,  and  signed 
the  note  or  instrument  sued  on.     Peck,  the  cashier,  was  outside, 

440 


CH.  XV.]  WRONGFUL    NEGOTIATION.  ILL.   CAS. 

he  says,  and,  just  after  signing  the  note.  Gay  and  the  defendant 
Gordon  came  out  on  the  sidewalk,  and  Gay  said  to  the  cashier, 
"  I  will  take  this  note,  and  get  the  other  names  on  it,  and  send  or 
bring  it  up;  and  it  will  be  all  right,  will  it?"  Peck  said  it 
would.  No  other  names  were  mentioned  in  Pi  ck's  presence,  but 
Gay  mentioned  Brown  Wilkinson  to  defendant  as  one  who  would 
sign  with  them.  The  other  names  he  could  uot  call,  except  May, 
who  did  sign.  The  defcndiuit  also  called  Peck,  the  cashier, 
who  testified  that  tiie  bank  held  a  note  on  Gay  for  §4,000  ;  that  it 
was  past  due.  About  two  weeks  before  the  note  in  suit  was  given 
to  the  bank,  the  witness,  one  day,  at  Rockport  requested  Gay  to 
arrange  the  $4,000  note  ;  this  being  the  usual  custom  of  banks, — 
that  when  paper  became  due  the  maker  should  either  pay  it 
or  renew  it.  He  says  he  saw  defendant  sign  the  note  in  the  bank. 
Did  not  hear  anything  about  any  names  to  go  on  the  note,  and 
knew  nothing  of  such  an  agreement.  Gay  afterwards  sent  him 
the  note,  and  on  the  same  day  it  was  credited  on  the  $4,000  note, 
and  about  the  same  time  a  mortgage  was  given  by  Gay  to  secure 
the  balance  of  the  note.  The  note  sued  on,  and  the  mortgage, 
satisfied  the  $4,000  note.  The  court  gave  the  following  instruc- 
tion for  defendants:  (5)  If  the  jury  believes  that,  at  the  time 
defendant  Gordon  signed  tlu;  contract  or  instrument  in  suit,  it  was 
the  express  understanding  and  agreement  by  and  between  defend- 
ants Gay  and  Gordon  thnt  saiil .contract  or  instrument  should  not 
be  delivered  to  the  bank  until  one  A.  B.  Wilkinson  had  signed 
the  same  as  security  thereon,  and  you  further  believe  from  the 
evidence,  facts,  and  circumstances  in  proof  that  J.  W.  Peck,  the 
cashier  of  the  bank,  liad  knowledge  of  such  agreement  and  under- 
standing between  Gay  and  Gordon,  and  knew  that  Gordon  under- 
stood from  Gay  that  said  contract  or  instrument  was  not  to  be 
delivered  until  it  was  signed  by  said  Wilkinson,  and  you  further 
find  that  said  contract  or  instrument  was  deliveroil  to  the  bank 
without  the  signature  of  s;iid  Wilkinson,  your  verdict  should  be 
for  the  defendant.  And  3'ou  are  further  instructed  that  the  bur- 
den of  ijroving  that  there  was  an  agreement  between  Gay  and 
Gordon  that  Wilkinson  was  to  sign  the  contract  or  instrument  of 
writing  as  surety,  and  that  Peck  knevv  of  such  agreement  before 
he  received  the  same  and  gave  credit  on  the  note,  is  upon  the 
defendant."  The  court  refused  to  Instruct  that  such  an  agree- 
ment, made  without  the  knowledge  of  tlie  bank,  would  release 
defendants,  and  refused  to  instruct  on  the  alleged  promise  of  the 
bank  not  to  accept  Gordon  as  surety  unless  there  were  otiier  sol- 
vent sureties  on  tlie  notes,  and  the  court  refused  to  instruct  on 
the  theory  of  a  conspiracy  between  Gay  and  Pock  to  get  Gordon 
to  sign  the  note.  The  jury  found  for  plaintiff,  and  defendant 
Gordon  ai)peals. 

1.  Since  the  decision  in  State  v.  Potter,  G3  Mo.  212,  it  has 
been  the  settled  law  of  this  court  that  when  a  surety  signs  a  bond 
or  note,  and  leaves  it  in  the  hands  of  his  principal  therein,  to  be 
delivered   only   on   condition   that   it  is  to  be   signed  by  other 

441 


ILL.   CAS.         SURETY    DISCHARGED    BY    EXTENSION.         [CH.  XV. 

sureties,  and  the  principal  delivers  the  bond  or  note,  in  violation 
of  this  agreement,  to  the  obligee,  and  the  obligee  has  no  notice 
of  such  an  agreement,  the  surety  will  be  bound.  State  v.  Modrel, 
69  Mo.  152  ;  State  v.  Baker,  64  Mo.  IG7  ;  State  v.  Hewitt,  72  Mo. 
604;  Woolf  V.  Schaeffer,  74  Mo.  158.  Hence  the  trial  court 
very  properly  refused  defendant's  first  instruction,  which  ignored 
notice  to  the  bank  of  the  alleged  agreement  as  to  additional  sure- 
ties. Instruction  No.  5,  copied  above,  gave  defendant  the  ben- 
efit of  the  law  as  it  is  established  in  this  State.  It  is  his  misfor- 
tune if  he  could  not  convince  the  jury  the  bank  knew  of  his 
agreement  with  Gay,  and  of  its  violation.  There  was  nothing  on 
the  face  of  the  paper  itself  to  indicate  that  it  was  incomplete. 

2.  Nor  can  we  agree  with  learned  counsel  that  the  record 
shows  no  consideration  for  tliis  note.  The  taking  of  this  new 
note,  extending  the  time  of  payment  90  days,  and  crediting  the 
old  note  with  that  sum  as  payment,  was  ample  consideration  for 
the  promise  in  the  new.  Bank  v.  Frame  (Mo.  Sup.),  20  S.  W. 
Rep.  620;  Crawford -y.  Spencer,  92  Mo.  498;  4  S.  W.  Rep.  713; 
Deere  v.  Marsden,  88  Mo.  512. 

3.  The  court  very  properly  declined  to  hear  the  evidence  of 
defendant  to  the  effect  that  he  had  an  agreement  with  the  cashier 
not  to  tajie  notes  with  his  name  on  them  unless  they  were  other- 
wise solvent.  The  alleged  promise  was  without  any  consideration, 
and  was  no  defense  to  this  action. 

4.  Neither  was  there  any  error  in  giving  plaintiff's  first  and 
only  instruction.  The  contract  provided  that  "  if  it  should  be 
collected  by  any  attorney,  or  by  process  of  law,"  the  attorney's 
fee  of  10  percent  should  be  a<lded.  The  action  itself  proved  that 
both  conditions  had  happened.  An  attorney  was  collecting  the 
note  by  process  of  law.  The  court  needed  no  fui-ther  evidence  to 
justify  it  in  instructing  for  the  additional  sum. 

5.  The  other  instructions  were  properly  refused  because  un- 
supported by  the  evidence.  The  irregularity  in  the  judgment 
was  not  raised  by  the  motion  for  new  trial  or  in  arrest,  and 
cannot  be  noticed  here. 

The  court  having  given  correct  instructions,  and  the  jury 
having  found  the  facts  against  the  defendant,  upou  competent 
evidence,  we  have  no  right  to  interfere  with  the  verdict,  and  the 
judgment  is  affirmed.     All  concur. 


Extension  of  Time  of  Payment  Without  Consent  of 
Surety,  Discharges  Him  Although  He  has  not  heen 
Thereby  Prejudiced. 

Sloan  V.  Latimer,  41  S.  C.  217  (19  S.  W.  491). 

McGowAN,  J.  On  July  1,  1890,  J.  A.  Mooney  and  J.  P. 
Latimer  executed  their  sealed  note,  joint  and  several,  for  $600, 
due   one  year  after  date,  payable  to  Thomas  Sloan,  or  bearer, 

442 


CH,  XV.]        SURETY   DISCHARGED    BY   EXTENSION.        ILL.  CAS. 

interest  from  date  at  8  per  cent  per  annum,  payable  annually. 
On  May  13,  1891,  Sloan  made  the  following  memorandum  on  tiie 
note,  at  the  bottom:  "1  hereby  extend  date  of  payment  of 
above  note  to  January  1,  1892,  with  the  privilege  of 
payment  before  maturity."  The  note  not  having  been 
paid  at  maturity,  action  was  brought  on  said  note  against  J.  P. 
Latimer,  who  answered,  and,  after  making  a  general  denial  of  all 
liability,  alleged,  by  way  of  special  defense,  that  he  did  sign  with 
J.  A.  Mooney  such  a  note  as  is  decribed  in  the  complaint,  but 
that  he  was  a  surety  thereto,  and  that  the  memorandum  above 
set  forth  constituted  such  an  alteration  of  the  contract,  and  such 
an  extension  of  the  time  of  payment,  as  discharged  his  obligation 
as  suieiy.  The  cause  was  tried  by  Judge  Norton  and  a  jury. 
The  signature  of  the  defendant,  Latimer,  to  the  note,  was  proved, 
and  it  was  offered  in  evidence.  Defendant  ol)jecled,  on  the 
ground  that  it  was  not  the  note  declared  upon,  having  been  altered. 
Objection  overruled.  The  phiintiff  then  testified  that  he  had 
voluntarily  made  the  memorandum  on  the  note,  without  consulta- 
tion with  any  of  the  parties,  as  a  kindness  to  Mooney.  At  the 
close  of  the  plaintiffs  testimony,  the  defendant  moved  for  a 
nonsuit,  upon  two  grounds  :  First,  that  the  memorandum  was  such 
an  alteration  as  avoided  the  note;  second,  that  it  was  such  an 
extension  of  credit  as  discharged  the  surety.  Motion  refused, 
and,  under  the  ciiarge  of  tlie  judge,  the  plaintiff  had  a  verdict  for 
$702.86.  From  this  vedict  ami  judgment  thereon,  the  defendant 
apjjeals,  ui)on  the  following  giounds:  "(1)  Because  the  circuit 
judge  erred  in  admitting  in  evidence  a  certain  sealed  note  signed  by 
J.  A.  Mooney  and  J.  P.  Latimer,  for  six  hundred  dollars,  of  date 
July  1,  1890,  when  it  appeared  from  its  face  that  it  was  not  tlie  same 
described  in  the  complaint,  in  that  it  contained  other  stipulations 
than  those  mentioned.  (2)  In  refusing  defendant's  motion  for 
a  nonsuit,  because  (a)  the  note  and  jjlaintiff's  own  testimony 
showed  that  j)laintiff,  since  its  execution  and  delivery,  had  ma- 
terially altered  the  terms  thereof,  by  adding  thereto  other  stipu- 
lations and  agreements,  without  the  knowledge  or  consent  of  the 
surety,  the  defendant  in  this  action;  (b)  because  it  appeared 
from  the  face  of  the  note  and  plaintiff's  own  testimony  that  plain- 
tiff hiid,  since  the  execution  and  delivery  of  said  note,  extended 
the  time  of  payment  tlureof  for  J.  A.  Mooney,  the  jtrincipal 
debtor,  without  the  knowledge  or  consent  of  this  defendant,  the 
surety  to  said  note  ;  (c)  because  there  was  no  evidence  entitling 
plaintiff  to  a  verdict.  (3)  In  not  holding  that  saiii  note  was 
void,  insofar  as  the  defendant  was  concerned,  in  tiiat  plaintiff 
had  add((l,  since  its  execution  and  delivery,  other  material  sti[)U- 
lationa  and  conditions  tiian  those  oiiginally  contained  in  the  said 
note,  witliout  defendant's  knc^wledge  or  consent.  (4)  In  send- 
ing the  jury  back  into  their  loom  after  they  had  rendered  a  ver- 
dict for  tiie  plaintiff.  It  in  no  wa}'  appears  that  the  verdict 
rendered  was  due  to  their  mistake  or  inadvertence,  or  other  than 
they  intended  to  render,"  etc. 

443 


ILL.  CAS.       GUARANTOR  RELEASED  BY  NEGLIGENCE.     [CH.  XV. 

It  seems  that,  after  some  conflict  in  the  authorities  upon  the 
subject,  it  has  been  finally  settled  in  this  State,  "  that  any  altera- 
tion of  a  written  security,  in  a  material  point,  renders  it  void  at 
least  as  to  a  surety."  Vaughan  v.  Fowler,  14  S.  C.  357  ;  Plyler 
V.  Elliott,  19  S.  C.  257  ;  Gardner  v.  Gardner,  23  S.  C.  588  ; 
Sanders  i;.  Bagwell,  32  S.  C.  238  ;  10  S.  E.  946  ;  and  authorities 
referred  to.  Then,  was  there  in  this  case  such  an  aUeraiion  as  to 
come  within  the  rule  above  stated?  It  is  certainly  not  ol)vious 
that  there  was  any  alteration,  which  was  likely  to  injure  the 
surety,  and  was  intended  for  that  purpose.  It  seems,  however, 
that  the  test  is  not  whether  the  alteration  complained  of  was 
injurious  or  beneficial  to  the  surety,  but  whether  there  was  a  ma- 
terial alteration  of  any  kind  whatever,  as  the  surety  is  entitled  to 
stand  upon  his  contract  percisely  as  he  made  it.  A  surety  is  a 
favorite  of  the  law,  and  has  a  right  to  stand  on  the  strict  terras  of 
his  obligation.  Tmsleyy.  Kirby,  17  S.  C.  1.  It  is  true  no  words 
in  the  note  were  actually  stricken  out,  and  others  substituted  for 
them.  The  note  by  its  terms  was  due  "  one  year  after  dale,  July, 
1890,"  and  the  memorandum  written  ou  the  face  of  the  note  was 
in  these  words:  "  I  hereby  extend  date  of  i)ayment  of  above  note 
to  January  1,  1892,  with  privilege  of  payment  before  maturity," 
etc.  Was  that  not,  in  effect,  equivalent  to  striking  out  the 
words  "one  year  after  date,"  and  inserting  in  their  place 
"one  year  and  six  months  after  date?"  We  suppose  that, 
during  the  six  months  supplemented  indulgence,  the  payee 
of  the  note  could  not  have  sued  upon  it ;  and  in  that 
respect  the  case  is  analogous  to  that  of  Gardner  v.  Gardner, 
supra,  in  which,  after  contest,  it  was  held  that,  "  where  a 
creditor  receives  from  the  principal  debtor  payment  of  interest  in 
advance  on  a  past-due  note,  an  agreement  to  give  time  is  neces- 
sarily implied,  and  the  creditor  thereby  debars  himself  of  suing 
meantime  on  the  note,  and  the  surety  is  therefore  discharged, 
unless  the  creditor  can  show  mistake,  or  possibly  an  agreement 
that  the  light  of  suit  should  not  be  suspended."  So  wc  think  the 
payee  in  this  case  could  not  have  sued  upon  the  note  before  the 
extended  time  allowed  for  payment  had  expired,  and  for  that  rea- 
son, as  in  Gardner  v.  Gardner,  the  surety  in  this  case  was  dis- 
charged. The  judgment  of  this  court  is  that  the  judgment  of  the 
circuit  court  be  reversed.     Mclver,  C.  J.,  and  Pope,  J.,  concur. 


Release  of  Guarantor  by  Want  of  Due  Diligence  in 
Enforcing'  Draft  Against  Acceptor. 

Salt  Springs  Nat.  Bank  v.  Sloan,  135  N.  Y.  371   (32  N.  E.  231). 

Appeal  from  supreme  court,  general  term,  fourth  department. 

Action  by  the  Salt  Springs  National  Bank  of  Syracuse  against 
George  B.  Sloan  on  a  bond  guarantying  several  drafts  acceptt  d 
by  Baker  &  Clark  and  discounted  by  plaintiff.  The  trial  at  cir- 
cuit resulted  in  a  verdict  in  plaintiff's  favor.     From  an  order  of 

444 


CH.  XV.  J     GUARANTOR  RELEASED  BY  NEGLIGENCE.       ILL.  CAS. 

the  general  term  (IT)  N.  Y.  Supp.  306)  setting  aside  a  verdict  and 
granting  a  new  trial,  plaiuliflf  appeals.     Reversed. 

Peckiiam,  J.  Tliis  action  was  tried  at  the  Onondaga  circuit 
before  a  jur}-.  The  bond  upon  which  the  suit  was  brought  was 
executed  l)y  the  defendant  February  19,  1887.  For  some  time 
prior  to  tluiL  dale  tiure  liad  been  a  firm  doing  business  at  Oswego 
under  tlie  name  of  Austin  &  Co.,  and  such  firm  had  at  that  time 
been  insolvent  for  some  months.  There  was  another  firm 
doing  business  in  the  city  of  New  York  under  llie  firm  name  of 
Baker  &  Clark,  which  firm,  some  months  prior  to  the  above  date, 
had  also  become  insolvent,  and  bad  made  an  assignment  to  an 
assignee  for  tlic  benefit  of  creditors.  The  firm  of  Austin  &  Co. 
had  drawn  drafts  to  the  amount  of  over  $10,000  upon  the  firm  of 
Baker  &  Clark,  which  firm  had  duly  accepted  them,  and  the  drafts 
had  been  discounted  for  tlie  New  York  firm  by  the  plaintiff. 
They  had  all  matured  and  been  dishonored  prior  to  the  execution 
of  the  bond  in  suit,  and  the  plaintiff  still  held  and  owned  them. 
On  the  19lh  of  Februarj^  1887,  the  defendant  executed  the  bond, 
and  at  the  same  time,  and  as  part  of  the  same  transaction,  the 
plaintiff,  by  its  president,  executed  an  agreement  in  writing,  and 
delivered  it  to  the  defendant.  The  bond  recited  the  drawing  of 
the  drafts,  six  iu  number,  giving  the  names  of  their  makers  and 
acceptors,  dates  and  amounts,  and  also  stated  that  Baker  «&;  Clark 
had  made  an  assignment  for  the  benefit  of  their  creditors  before 
any  of  the  drafts  became  due,  and  had  preferred  plaintiff  in  class 
"  B  "  of  creditors  for  the  amount  then  owing  on  the  drafts,  and 
being  about  $7,000  ;  and  tliat  not  one  of  the  drafts  had  been  paid. 
The  bond  then  continued  with  this  language:  "  Now,  therefore, 
the  condition  of  this  obligation  is  such  that  if  the  above-bounden 
George  B.  Sloan  shall,  within  one  year  from  date  thereof,  pa}'  the 
said  Salt  Springs  National  Bank  of  lS3Tacuse  any  deficiency  up  to 
the  said  sum  of  $5,000  remaining  unpaid  to  said  bank  on  said  drafts 
and  which  the  said  the  Salt  Springs  National  Bank  of  Syracuse, 
after  due  diligence,  shall  fail  to  collect  within  the  time  above 
limited  from  the  said  Baker  &  Clark,  or  either  of  them,  or  from 
the  said  Clarence  ¥.  Birdseye,  as  assignee,  as  aforesaid  or  other- 
wise, then  this  obligation  to  become  void  ;  otherwise  to  remain  in 
full  force  and  virtue."  The  agreement  made  on  the  part  of  the 
plaintiff  recited  that  "whereas,  the  Salt  Springs  National  Bank 
of  Syracuse  has  this  day  received  from  George  B.  Sloan,  of  the 
city  of  Oswego,  N.  Y.,  his  bond  for  the  sum  of  $5,000,  dated 
February  19,  1887,  upon  the  following  terms  and  conditions, 
and  the  terms  and  conditions  in  said  bond  set  out,  to  wit :  Said 
bank  shall  use  due  diligence  to  collect  the  six  drafts  named  in 
said  bond  from  Clai-encte  F.  Birdseye,  of  New  York  city,  as 
assignee  of  the  Baker  &  Clark  named  in  said  bond,  or  from  Baker 
&  Clark,  and  out  of  the  moneys  obtained  from  said  assignee 
"  the  bank  was  to  apply  the  same  to  the  payment  of  the  drafts, 
and,  if  any  surplus  moneys  had  been  paid  by  Sloan,  tliey  were  to 
be  returned  him  b}^  the  bank.     It  also  appeared  in  evidence  that 

445 


ILL.  CAS.       GUARANTOR  RELEASED  BY  NEGLIGENCE.     [CH.  XV. 

before  the  first  of  the  drafts  mentioned  in  the  bond  had  become 
due  the  drawers  had  "got  into  financial  difficulties,  and  trans- 
ferred their  property."  The  first  draft  which  became  due  was 
placed  in  the  hands  of  the  attorney  for  the  plaintiff,  and  judg- 
ment against  the  drawers  was  recovered  and  supplementary  pro- 
ceedings had  been  instituted  against  them,  and  some  negotiations 
had  been  entered  upon  for  the  giving  of  security  by  the  drawers. 
It  was  at  this  stage  of  the  matter  that  tbe  bond  and  agreement 
above  referred  to  were  executed.  The  understanding  between 
the  parties  seems  to  have  been  that  tlie  plaintiff  was  to  take  no 
further  proceedings  against  Austin  &  Co.,  but  should  go  on,  and 
see  what  could  be  collected  from  the  New  York  people.  The 
amount  of  the  diafls  not  having  been  collected  from  Baker  & 
Clark,  or  their  assignee,  within  the  year,  the  plaintiff  commenced 
this  action  against  defendant,  and  sought  to  recover  the  $5,000, 
which  it  alleged  he  was  liable  for  by  reason  of  the  execution  of 
the  bond.  The  defendant  set  up  in  his  answer  as  a  defense  that 
the  plaintiff  had  not  performed  the  condition  precedent  to  a  lia- 
bility on  his  part  on  the  bond,  and  he  alleged  that  it  had  failed  to 
proceed  with  due  diligence  to  collect  the  amount  due  on  the 
drafts  from  Baker  &  Claik,  or  either  of  them,  or  from  their  as- 
signee. Upon  the  trial  the  sole  substantial  issue  was  whether 
the  plaintiff  had  or  had  not  used  due  diligence  in  its  prosecution 
of  tbe  acceptors  or  their  assignee.  Evidence  was  given  as  to 
what  it  had  done,  and  the  time  and  manner  of  doing  it,  and  some 
evidence  was  given  on  the  part  of  the  defendant.  The  learned 
trial  judge  submitted  the  question  as  to  the  due  diligence  of  the 
plaintiff  to  the  jury,  and  a  verdict  for  the  plaintiff  was  rendered 
by  it.  The  general  term  has  held  that  the  evidence  in  the  case 
was  undisputed,  and  that  it  raised  a  question  of  law  onl}^  and 
upon  that  question  it  held  that  the  plaintiff  had  not  prosecuted 
its  attempt  to  collect  with  due  diligence,  and  therefore  was  not 
entitled  to  recover,  and  it  reversed  the  judgment,  and  granted  a 
new  trial,  and  from  the  order  granting  a  new  trial  the  plaintiff 
has  appealed  here. 

Tbe  general  rule  in  regard  to  one  who  becomes  the  guarantor 
of  tbe  collection  of  a  demand  is  that  in  so  doing  he  undertakes 
that  the  claim  is  collectible  by  due  course  of  law,  and  the  guar- 
antor only  promises  to  pay  when  it  is  ascertained  that  it  cannot 
be  collected  by  suit  prosecuted  to  judgment  and  execution  against 
the  principal,  and  the  endeavor  to  so  collect  is  a  condition  pre- 
cedent to  a  right  of  action  against  the  guarantor ;  and  the  fact 
of  insolvency  is  no  excuse  for  the  failure  to  prosecute.  Craig 
V.  Parkis,  40  N.  Y.  181  ;  Insurance  Co.  v.  Wright,  76  N.  Y.  445. 
The  judgment  must  have  been  recovered,  and  the  execution  issued 
thereon  must  have  been  returned  unsatisfied  in  whole  or  in 
part,  before  any  liability  is  fastened  upon  the  guarantor ;  and 
this  judgment  must  have  been  recovered  without  unnecessary 
delay.  The  guai-anty  in  question  is  peculiar  in  its  language.  At 
the  end  of  the  year  the  guarantor  promised  to  pay  any  deficiency 

44G 


CH.  XV.]     GUARANTOR  RELEASED  BY  NEGLIGENCE.       ILL.  CAS. 

up  to  the  amount  of  $5,000  remaining  unpaid  on  the  drafts 
after  due  diligence  had  been  exercised  by  the  bank  to  collect 
their  amount  wilhin  tlie  time  limited.  It  is  plain  that  due  dili- 
gence might  be  exercised  in  such  case  during  that  time, 
and  yet  no  judgment  have  been  recovered,  and,  of  course, 
no  execution  issued  or  returned  unsatisfied.  If  it  had  been 
thus  exercised,  t^ie  liability  of  the  guarantor  would  attach 
without  the  recovery  of  such  judgment.  In  this  respect 
there  is  a  distinction  between  the  guaranty  contained  in  this 
bond  and  that  of  a  general  guaranty  of  collection.  There  is  the 
further  difference  that  the  guarantor  promises  to  pay  the  de- 
ficiency up  to  the  stated  amount  which  the  plaintiff  fails  to  col- 
lect within  the  year  (after  due  diligence)  from  Baker  &  Clark, 
or  either  of  them,  or  from  their  assignee.  It  was  understood 
that  Baker  &  Clark  had  made  an  assignment  for  the  benefit  of 
their  creditors,  and.  if  the  assignment  was  not  fraudulent,  it 
was,  of  course,  known  that  the  property  of  Baker  &  Clark  had 
become  the  property  of  the  assignee,  as  trustee,  and  for  the  pur- 
pose only  of  executing  the  provisions  of  that  instrument.  In 
that  case  the  only  recourse  the  plaintiff  could  have  against  the 
assignee  would  be  to  see  to  it  that  he  faithfully  and  expedi- 
tiously carried  out  the  directions  contained  in  the  assignment. 
This  the  assignee  might,  and  presumptively  would,  do  without 
any  resort  to  compuKory  process  on  the  part  of  the  plaintiff  or  any 
other  party.  The  due  diligence  that  was  required  of  the  plaintiff 
did  not,  therefore,  render  it  necessary  that  legal  proceedings 
should  at  once  be  coram menced  against  the  assignee.  If  the 
latter  was  proceeding  with  proper  celerity  in  the  execution  of 
his  trust,  and  assuming  the  validity  of  the  assigement,  there 
was  nothing  for  the  plaintiff  to  do  of  a  legal  nature  as 
against  him.  If,  however,  the  assignment  was  invalid,  and 
had  been  made  for  the  purpose  of  hindering  and  delaying 
creditors,  then  an  attack  against  the  assignee  as  well  as 
against  the  assignors  for  the  purpose  of  setting  aside  the  assign- 
ment might  be  necessary.  In  order  to  determine  the  question  of 
the  vali(lity  or  the  invalidity  of  the  assignment,  knowledge  of  the 
facts  which  caused  its  execution,  and  some  evidence  of  the 
motives  accompanying  it,  would  obviously  be  necessary.  If 
plaintiff  entered  upon  and  prosecuted  the  examination  of  this 
question  with  due  diligence  and  discovered  there  were  no  grounds 
upon  which  to  base  an  attack  upon  the  good  faith  and  validity  of 
the  assignment,  and  if  the  assignee  duly  performcii  his  duties 
under  the  assignment  while  the  year  lasted,  it  would  seem  that 
under  such  facts  it  could  not  be  determined  as  matter  of  law  that 
the  plaintiff  had  not  done  all  which  could  be  expected  of  it,  or 
that  due  diligence  required  as  against  the  assignee  to  fulfill  the 
conditions  of  the  bond  in  question.  The  duty  to  use  due  dili- 
gence in  attempting  to  collect  from  Baker  &  Clark  was  also  in- 
cumbent upon  tlie  plaintiff.  It  was  not  an  alternative  duty, 
which   existed   only   in    case   the    assignee  were  not  proceeded 

447 


ILL.  CAS.       GUARANTOR  RELEASED  BY  NEGLIGENCE.     [CH.  XV. 

against.  The  condition  of  the  bond  called,  as  I  think,  for  the 
exercise  of  due  diligence  as  against  both ;  but  the  fact  (if 
it  were  a  fact)  that  examinations  and  investigations  regarding 
the  validity  of  the  assignment  itself  were  in  progress  might 
properly  be  taken  into  consideration  upon  the  question  whether 
due  diligence  were  being  used  in  reference  to  Baker  &  Clark. 
Again,  it  might,  under  some  circumstances,  be  quite  an 
important  question  to  determine  as  to  the  character  of  the 
legal  proceedings  to  be  taken  against  the  principals.  Should 
such  proceedings  be  the  simple  action  upon  the  drafts  as  upon 
instruments  for  the  payment  of  money  only,  or  should  the  action 
be  one  in  tort,  as  arising  out  of  a  fraudulent  creation  of  the  debt, 
and  thus  give  to  the  plaintiff  the  right  to  arrest  on  mesne  process, 
and  to  take  the  person  upon  the  judgment  to  be  obtained?  The 
answer  would  depend  upon  the  facts  to  be  learned,  and,  if  there 
were  suspicious  circumstances,  which  might  fairly  justify  the 
resort  to  a  more  prolonged  investigation,  made  in  good  faith,  and 
for  the  honest  purpose  of  obtaining  information  upon  which  to 
act,  it  could  not  be  said  as  a  matter  of  law  that  in  such  case,  and 
pending  the  investigation,  due  diligence  was  not  exercised  in 
attempting  to  collect  the  amount  of  the  drafts  by  action. 

With  this  review  of  the  situation  and  of  the  meaning  of  the 
bond  in  suit,  it  is  proper  in  a  very  general  way  to  advert  to  the 
evidence  given  on  the  trial  on  the  part  of  plaintiff  as  to  what  the 
plaintiff  actually  did  in  the  way  of  using  due  diligence  to  collect 
the  amount  of  these  drafts.  Almost  immediately  after  the  execu- 
tion of  the  bond  the  supplementary  proceedings  against  Austin  & 
Co.,  which  had  been  commenced  in  Oswego,  were  resumed,  for 
the  purpose  of  obtaining  from  them,  and  in  a  manner  which 
would  not  appear  to  be  voluntary,  certain  letters  in  their  posses- 
sion, which  it  was  thought  might  be  of  importance  upon  the 
proceedings  which  might  be  commenced  against  Baker  & 
Clark  in  New  York ;  and  under  the  cover  of  these  proceedings  the 
attorney  of  the  plaintiff  obtained  the  letters.  It  is  to  be  gathered 
there  was  some  importance  attached  to  them  relative  to  the  ques- 
tion of  the  liability  of  Baker  &  Clark  as  for  a  fraudulent  debt  in 
obtaining  the  discount  of  the  drafts  by  the  plaintiff.  Then  the 
attorney  for  the  plaintiff  went  to  New  York,  and  entered  upon 
what  he  claimed  was  a  most  thorough  investigation  of  all  the 
facts  attending  the  execution  of  the  assignment,  for  the  purpose 
of  discovering,  if  possible,  some  means  of  attacking  its  hona 
fides.  He  went  to  different  creditors,  put  himself  in  communi- 
cation with  their  attorneys  to  ascertain  if  they  knew  of  any  facts 
which  would  aid  in  such  an  attack,  and,  in  brief,  he  did,  as  he 
claims,  everything  that  one  could  be  expected  to  do  who,  acting 
in  good  faith,  was  endeavoring  to  find  out  if  any  facts  existed 
which  would  justify  an  attack  upon  the  assignment,  or  an  action 
of  tort  against  the  acceptors  of  the  drafts.  Finally  he  became 
convinced  there  was  no  chance  of  success  in  such  an  endeavor. 
He  also  endeavored  to  find  if  there  was  any  property  of  the  firm 
448 


CH.  XV.]     GUARANTOR  RELEASED  BY  NEGLIGENCE.       ILL.  CAS. 

which  had  not  been  turned  over  to  the  assignee  but  did  not  suc- 
ceed in  finding  any.  All  these  investigations  took  some  time, 
before  it  was  finally  determined  that  the  assignment  could  not  be 
successfully  attacked.  In  the  meantime,  and  within  a  week  from 
the  signing  of  the  bond,  the  attorney  for  plaintiff  commenced  to 
investigate  the  whereabouts  of  Baker, —  one  of  the  firm  of  Baker 
&  Clark;  and  the  evidence  is  quite  minute  as  to  what  he  did 
towards  finding  Baker,  for  the  purpose  of  serving  process  upon 
him.  Mr.  Baker  was  in  Brooklyn  but  a  very  short  time  after  the 
execution  of  the  bond,  and  it  was  claimed  he  was  endeavoring  to 
avoid  the  service  of  process.  He  soon  left  the  State,  and  did  not 
return  until  the  middle  of  August.  The  plaintiff  did  not  succeed 
in  serving  him  before  he  left  the  State,  and  the  defendant  charges 
that  no  fair  effort  was  made,  and  that  from  plaintiff's  own  show- 
ing service  could  have  been  made  on  Baker  frequently  while  he 
was  within  the  State.  No  service  of  process  was  made  on  Clark, 
the  other  meral)er  of  the  firm,  until  after  Baker's  return,  and 
some  time  in  September,  although  he  could  have  been  served  at 
any  time  during  the  period.  The  plaintiff  says  the  reason  for  the 
omission  was  that  Clark  could  be  served  at  any  time,  and,  if 
served  during  Baker's  absence,  it  was  feared  the  latter  might  not 
return,  and  it  was  not  thought  wise  to  sue  Clark  separatel}'. 
Negotiations  were  also  pending  by  which  it  was  sought  to  obtain 
some  security  from  a  brother  of  Baker,  and  finally  the  brother, 
who  was  a  preferred  creditor  of  Baker  &  Clark  of  the  first  class, 
assigned  the  balance  due  him  under  the  assignment  as  security 
for  the  payment  of  the  drafts,  or  some  portion  thereof.  It  was 
feared  these  negotiations  would  be  broken  off  if  suit  was  com- 
menced against  Clark  while  Baker  was  away,  and  that  in  such 
case  Baker  would  remain  away.  The  defendant  charges  these 
negotiations  with  Baker  were  onty  for  the  payment  of  the  amount 
over  the  $5,000  claimed  from  defendant,  and  that  there  was  no 
good  faith  in  the  matter  of  these  negotiations,  or  in  the  excuse 
for  the  alleged  failure  to  press  with  due  diligence  the  case  against 
Baker  &  Clark.  Process  was  finally  served  on  Baker,  August 
27,  1887,  he  having  returned  to  tlie  State  on  the  loth  of  that 
month,  and  on  Clark  on  the  7th  of  September  following.  They 
appeared  by  attorney,  and,  under  a  threat  on  the  part  of  the 
latter  to  put  in  an  answer  unless  time  for  an  investigation  into  the 
matter  was  given,  the  attorney  for  plaintiff  gave  various  exten- 
sions of  time  to  answer,  aggregating  some  90-odd  days,  when  a 
default  occurred,  and  judgment  was  entered  January  4,  1888, 
and  a  transcript  filed  in  New  York  county,  January  5,  1888. 
After  the  date  of  the  service  of  the  process  on  Baker  and  Clark 
the  first  circuit  held  in  Onondaga  was  appointed  for  the  fourth 
Monday  — the  2Gth — of  September,  1887.  An  answer  would 
have  prevented  the  case  going  on  at  that  circuit.  The  next 
circuit  was  held  in  that  county  January  9,  1888.  Before  that 
date  judgment  had  been  obtained.  It  was  claimed  by  tlie  plain- 
tiff tliat  by  the  course  pursued,  which,  it  is  urged,  was  ofuided  to 

29  44'J 


ILL.  CAS.       GUARANTOR  RELEASED  BY  NEGLIGENCE.     [CH.  XV. 

some  extent,  by  the  threat  of  Baker  &  Clark's  attorney  to  put  in 
an  answer,  and  defend,  at  any  rate,  if  time  was  not  ^iven,  the 
extensions  of  time  actually  given,  operated  to  plaintiff's  advan- 
tage by  finally  enabling  it  to  obtain  judgment  at  an  earlier 
day  than  it  would  have  been  enabled  to  do  if  the  extensions  had 
been  refused,  and  the  defendants  in  that  action  driven  to 
the  serving  of  an  answer.  The  defendant  here  claims  the 
extensions  were  wholly  voluntary,  totally  unnecessary,  not  given 
under  a  bona  fide  effort  to  prosecute  with  due  diligence,  and 
hence  they  constituted  an  inexcusable  delay  in  prosecuting  the 
action,  and  a  defense  to  this  action  on  the  bond.  After  the 
entry  of  the  judgment  and  the  filing  of  a  transcript  thereof  in 
New  York  county,  there  was  a  delay  of  over  a  month  in  the 
issuing  of  an  execution  thereon.  The  attorney  for  the  plaintiff 
swore  he  intended  that  an  execution  to  the  sheriff  of  New  York 
should  accompany  the  transcript,  and  he  supposed  that  it  did, 
but  in  fact  it  did  not,  and  in  fact  it  was  not  issued  for  more  than 
a  month.  The  attorney  says  he  can  only  explain  the  omission 
by  a  mistake,  or  his  absence  from  home  during  the  time.  No 
claim  is  made  that  the  defendants  Baker  &  Clark  had  any  prop- 
erty which  might  have  been  reached  by  an  execution  if  one  had 
been  issued  at  once  upon  the  entry  of  the  judgment,  and  there  is 
no  fact  found  in  the  evidence  which  would  lend  any  color  to  the 
suspicion  that  the  assignment  was  not  a  bona  fide  one,  which 
transferred  all  the  property  of  Baker  &  Clark  to  the  assignee  in 
trust.  It  also  appears  that  the  plaintiff  was  in  the  second  class 
of  preferred  creditors  in  that  assignment,  and  that  there  was  not 
enough  property  to  pay  in  full  the  creditors  in  the  first  class ; 
and  it  is  not  charged  that  the  assignee  was  guilty  of  any  want  of 
diligence  in  any  matter  pertaining  to  his  trust. 

This,  in  substance,  is  the  case  as  it  appeared  for  the  plaintiff 
upon  the  trial,  and  it  is  this  case  which  the  learned  general  term 
holds  presents  a  question  of  law  only.  It  is  undoubtedly  true 
that  in  many,  perhaps  in  most,  cases  the  question  of  what  con- 
stitutes due  diligence,  where  it  arises  upon  undisputed  evidence, 
is  one  of  law  only.  What  shall  constitute  a  reasonable  time  in 
which  to  do  an  act  is  also  generally  hold  to  be  a  question  of  law. 
So  is  the  question  of  what  constitutes  probable  cause  in  an  action 
for  a  malicious  prosecution.  So,  also,  is  the  question  of  negli- 
gence in  certain  contingencies.  In  none  of  these  instances  is 
there,  however,  an  unyielding  rule  that  upon  undisputed  evidence 
the  question  is  universally  one  of  law.  It  depends  frequently 
upon  the  character  of  the  evidence  itself  whether  it  is  of  such  a 
nature  that  but  one  inference  could  be  drawn  from  it  by  reasona- 
ble and  intelligent  men.  In  such  a  case  as  this,  for  instance,  the 
due  diligence  of  the  plaintiff  is  not  a  fact  that  could  be  testified 
to  directly  and  in  terms.  A  witness  for  the  plaintiff  would  not 
be  permitted  to  swear  that  due  diligence  was  observed  in  the 
prosecution  of  Baker  and  Clark.  In  order  to  prove  due 
diligence,    all    the    material    existing     facts     surrounding    the 

450 


CH.  XV.]     GUARANTOR  RELEASED  BY  NEGLIGENCE.       ILL.  CAS. 

case  should  be  sliown,  and  a  statement  in  detail  of  all 
the  things  actually  done  in  the  way  of  prosecuting  the 
matter  would  have  to  be  proven,  and  then,  from  all  these 
things  thus  proved,  the  resultant  fact  of  due  diligence,  or  its 
absence,  would  have  to  be  found  either  by  the  court  or  a  jury. 
If  this  resultant  fact  to  be  found  from  all  the  evidence  in  the 
case,  uncontradicted  though  that  evidence  may  be,  were  of  so 
doubtful  a  nature  that  different  and  equally  intelligent  and 
unbiased  men  might  fairly  differ  in  opinion  as  to  its  character, 
then  the  jury,  under  proper  instructions  from  the  court,  should 
examine  the  evidtnce,  and  find  the  fact  which  is  properly  to  be 
inferred  therefrom.  It  was  at  one  time  thought  that,  where  the 
evidence  was  uncontradicted  or  undisputed,  the  cpicstion  of  neg- 
ligence was  one  of  law  only  ;  but  that  claim  has  long  since  been 
abandoned.  There  may  be  cases,  of  course,  where,  the  evidence 
being  undisputed,  a  clear  question  of  law  only  arises,  and  the 
court  thereupon  decides  that  no  negligence  is  shown,  or  the 
reverse.  If  the  uncontradicted  evidence  shows  a  case  where 
different  inferences  might  be  drawn  from  undisputed  facts  as  to 
the  existence  or  non-existence  of  negligence,  it  has  been  the  law 
for  many  years  that  such  inferences  are  to  be  drawn  by  the  jury, 
under  proper  instructions  from  the  court.  Hart  v.  Bi  idge  Co. ,  80 
N.  Y.  622.  The  same  may  be  said  of  the  want  of  probable  cause 
in  actions  for  malicious  prosecution.  Generally  it  is  a  question 
of  law,  yet  frequently,  upon  undisputed  evidence,  it  is  made  a 
mixed  question  of  law  and  fact.  The  jury  draws  the  inferences, 
if  they  might  fairly  be  the  subject  of  difference  in  different 
minds  of  equal  intelHgenee,  and  tlie  court  gives  the  proper 
instructions  to  the  jury.  This  principle  was  thus  asserted  in  the 
case  of  Mead  v.  Parker,  111  N.  Y.  259,  18  N.  E.  Rep.  727, 
although,  perhaps,  it  was  not  directly  and  necessarily  involved  in 
the  point  actuall}'  there  decided.  See,  also,  Sullivan  v.  Cement 
Co.,  IIU  N.  Y.  348;  23  N.  E.  Rep.  820;  Reillyv.  Dodge,  131  N. 
Y.  153,  159;  29  N.  E.  Rep.  1011.  The  principle  is,  however, 
correct.  If  the  undisputed  evidence  shows  a  state  of  facts  from 
which  but  one  inference  could  properl}'^  and  justly  he  drawn  by 
any  fair  and  intelligent  man,  then  the  question  of  due  diligence 
is  one  for  the  court  alone. 

U[)on  the  evidence  already  detailed  in  this  case  we  are  clearly 
of  tlie  opinion  that  the  question  presented  was  one  for  the  jury, 
under  proper  instructions  from  the  court.  The  court  charged 
thtit  the  plaintiff  was  bound  to  use  due  diligence  up  to  the  time  it 
commenced  this  action,  although  beyond  the  period  of  the  year 
specified  in  the  bond.  The  jury  was  charged  with  the  duty  of 
considering  the  question  whether,  upon  all  the  evidence  in  the  case, 
the  plaintiff  used  due  diligence  in  piosecuting  Baker  and  Clark, 
and  also  against  the  assigned  estate.  The  court  also  said  to  the 
jury  that,  if  the  extensions  of  time  to  answer  were  given  volun- 
tarily (of  which  they  were  to  judge  ujjon  the  evidence),  then  more 
time  was  given  to  the  defendant  than  due  process  of  law  entitled 

451 


ILL.  CAS.       GUARANTOR  RELEASED  BY  NEGLIGENCE.     [CH.  XV. 

him  to.  The  defendant  here  makes  several  claims  as  proved  by 
this  evidence.  He  urges,  first,  that  the  failure  to  serve  Baker 
with  process  before  he  left  the  State  in  March  or  April,  1887,  was 
a  failure  to  exercise  due  diligence,  and  that  the  efforts  to  serve  him 
as  stated  on  the  part  of  the  plaintiff  were  not  made  in  good  faith, 
and  were  not,  under  all  the  circumstances,  sufficiently  persistent  to 
show  due  diligence.  This  question  of  good  faith  was  pecuUarly 
proper,  upon  the  evidence,  for  a  jury  to  decide.  It  is  also 
claimed  the  excuse  for  the  failure  to  serve  Clark  until  after  Baker 
had  been  served  was  unjustifiable.  The  evidence  upon  that  sub- 
ject, though  not  disputed,  leaves  a  question  as  to  the  bona  fides 
of  the  excuse  actually  given,  whether  the  fact  stated  was  really 
and  in  good  faith  the  motive  and  cause  of  plaintiff's  conduct. 
This,  also,  upon  the  evidence,  was  a  question  for  the  jury.  The 
negotiations  for  security  from  Baker's  brother  are  also  attacked 
as  not  having  been  made  in  good  faith,  and  for  the  purpose  of 
collecting  as  much  as  possible  upon  these  drafts ;  and  conse- 
quently it  is  urged  that  they  furnish  no  excuse  or  justification  for 
failing  to  serve  Clark,  even  though  Baker  was  out  of  the  State. 
The  excuse  offered  for  this  failure  has  been  stated  above,  and 
here,  again,  we  think  it  was  a  fair  question  for  the  jury  to  say 
whether  the  excuse  was  a  bona  fide  one,  and  had  really  caused  the 
delay  spoken  of.  Other  questions  of  good  faith  on  the  part  of  the 
plaintiff  arose  in  the  progress  of  the  case.  Enough  has  been  said 
to  show  the  question  whether  the  plaintiff  acted  with  due  diligence 
depended  upon  the  construction  to  be  given  quite  a  number  of 
different  acts  of  the  plaintiff,  and  upon  the  motives  which  accom- 
panied them ;  whether  those  acts  were  in  reality  performed  in 
good  faith,  and  for  the  purpose  of  honestly  fulfilling  the  duty 
owed  by  plaintiff  to  defendant,  or  were  simply  actions  intended 
as  a  mere  cover  or  blind  to  excuse  the  failure  to  prosecute,  while 
at  the  same  time  affording  ground  for  the  pretense  that  the  plain- 
tiff had  done  all  it  could  to  collect  the  drafts  from  the  assignee  of 
the  estate  or  from  the  firm  of  Baker  &  Clark.  These  matters 
were  peculiarly  of  a  nature  for  a  jury  to  decide  upon,  and  it 
would  appear  that  the  question  was  submitted  to  that  tribunal 
with  great  fairness  by  the  learned  trial  judge,  and  upon  proper 
instructions  as  to  the  law  governing  the  case. 

One  other  objection  to  this  recovery  is  made  by  the  defendant. 
The  plaintiff  failed  to  prosecute  Baker  and  Clark  by  action  upon 
one  of  the  six  drafts  mentioned  in  the  bond.  It  commenced  its 
action  and  obtained  its  judgment  upon  the  remaining  five  only. 
The  defendant  claims  the  prosecution  should  have  been  upon  all  of 
them,  and  that  the  failure  constitutes  a  defense  to  the  bond.  The 
draft  upon  which  no  suit  was  brought  was  put  in  evidence,  and 
the  plaintiff  maintained  it  was  paid,  although  it  was  not  so 
marked.  The  court  charged  it  might  be  considered  a  due  prose- 
cution of  the  draft  when  the  plaintiff  acknowledged  that  it  got 
the  money  on  it,  and  made  no  demand  upon  the  defendant  there- 
for.    The  plaintiff,  in  truth,  made  no  claim  for  or  on  account  of 

452 


CH.  XV.]  SURRENDER    OF   SECURITIES.  ILL.  CAS. 

that  draft,  and  we  think  the  trial  court  committed  no  error  in  the 
disposition  of  the  case  with  regard  to  it. 

We  have  looked  through  the  case  with  respect  to  the  exceptions 
taken  upon  the  decisions  of  the  court  as  to  the  admission  or 
rejection  of  evidence,  and  we  are  uuuble  to  see  that  any  error  to 
the  prejudice   of  the  defendant  occurred  in    their    disposition. 

Upon  the  whole  case,  we  think  the  court  properly  left  the  ques- 
tion of  due  diligence  to  the  jury.  The  order  of  the  general  term 
granting  a  new  trial  should  therefore  be  reversed,  and  the  judg- 
ment entered  upon  the  verdict  of  the  jury  should  be  affirmed  with 
costs.     All  concur,  except  Andrews,  J.,  not  voting. 


Surrender  of   Securities  Held  by  Payee  or  Indorser  Dis- 
chargees Guarantor  or  Surety. 

Rogers  v.  School  Trustees,  46  111.  428. 

Mr.  Justice  Walker.  This  was  an  action  of  debt,  brought  by 
the  schools  of  township  23,  north  of  range  4,  east,  in  the  McLean 
circuit  court,  against  John  J.  Price,  George  W.  Stipp  and  Elihu 
Rogers,  on  a  note  under  seal.  Price  was  defaulted,  but  Rogers 
and  Slipp  filed  separate  pleas ;  and  there  was  an  agreement  by 
counsel  in  the  case,  that  all  matters  that  might  be  specially 
pleaded  could  be  given  in  evidence  under  the  general  issue.  A 
trial  was  had  by  the  court,  resulting  in  a  judgment  in  favor  of 
the  plaintiffs  for  $958  debt,  and  S^78  damages,  from  which  an 
appeal  was  prayed  by  Rogers  and  SUpp,  but  the  former  alone 
perfected  his  appeal,  and  brings  tlie  case  to  this  court. 

It  appears  from  the  record  that  the  school  commissioner  sold 
to  Price  ILe  N.  E.  16,  23  N.  4  E.,  on  the  1st  of  October,  1851, 
for  the  sum  of  $478.09,  and  took  his  note  for  that  amount  for 
the  purchase-money,  ])ayahle  five  years  after  date,  with  Rogers, 
Stipp,  and  Glimpsie  as  securities.  He,  at  the  same  time,  took 
of  Price  a  mortgage  on  the  premises  to  secure  the  paynaent  of  the 
note.  On  the  same  day  Stipp  also  purchased  the  S.  P^.  quarter 
of  the  same  section,  from  the  school  commissioner,  for  $479.19, 
for  which  he  gave  his  note,  with  Price,  Rogers,  and  Glimpsie  as 
securities,  and  gave  a  mortgage  on  the  land  to  secure  its  pay- 
ment. Afterward  the  school  commissioner  turned  over  the  notes 
to  the  appellees,  and  they  held  them  as  a  part  of  the  school  fund 
of  the  townsliip. 

Before  the  maturity  of  the  notes.  Price  bought  Stipp's  quarter 
for  about  S  1,000,  and  as  a  part  of  the  consideration,  agreed  to 
pay  Stipp's  note,  given  to  the  school  commissioner,  and  gave  his 
notes  for  the  remainder.  To  secure  these  notes  he  executed  a 
mortgage  on  tlie  premises.  About  this  time  the  notes  to  the  school 
commissioner  fell  due,  and  the  treasurer  of  the  township  applied 
to  Price  and  Stipp  to  renew  the  notes,  and  Price  gave  his  note 
for  both  of  tlie  previous  notes,  and  Rogers  and  Stipp  became 
sureties,  and  the  old  notes  were  given  up  and  cancelled. 

453 


ILL.   CAS.  SURRENDER    OF    SECURITIES.  [CH.  XV. 

The  treasurer  still  held  the  mortgages  given  to  the  school  com- 
TDissioner  by  Price  and  Stipp.  On  the  2d  day  of  Januar}',  1857, 
Price  executed  a  mortgage  to  one  Folsom,  on  the  N.  E.  qr.  16, 
23  N.  4  E.,  to  secure  a  note  of  $1,180,  given  by  him  to  Folsom, 
due  in  one  year,  which  was  duly  recorded  the  day  after  it  was 
executed. 

On  the  8th  of  October,  1858,  appellees  applied  to  Price  to  give 
them  a  new  mortgage,  to  secure  the  note  which  he  executed  on 
the  same  quarter  section  he  had  mortgaged  to  Folsom.  Appellees 
accepted  this  mortgage  and  canceled  both  of  the  flrst  mortgages, 
and  had  this  mortgage  recorded.  On  the  5th  of  December,  1861, 
Nichols,  the  assignee  of  the  $5,600  mortgage  given  by  Price  to 
Stipp,  filed  his  bill  to  foreclose.  A  decree  was  rendered  for 
$5,000,  declai'ing  that  the  mortgage  was  the  first  incumbrance  on 
the  land.  Under  this  decree  the  land  was  sold  to  Nichols  for 
$3,200,  and  not  being  redeemed  he  I'eceived  a  deed.  On  the  23d 
day  of  August,  1861,  Folsom  filed  a  bill  to  foreclose  his  mort- 
gage on  the  Price  quarter.  Appellees  were  made  parties,  and 
were  defaulted,  and  a  decree  of  foreclosure  was  rendered  for  the 
amount  of  the  mortgage,  which  was  declared  to  be  a  first  lien  on 
the  land.  This  land  was  sold  to  complainant  under  the  decree 
for  $1,229.92,  and  not  havingbeen  redeemed  within  twelve  months, 
Nichols,  as  a  judgment  creditor,  redeemed  and  became  the  pur- 
chaser, and  afterward  received  a  deed. 

It  appears  that  at  the  time  the  mortgages  were  foreclosed  the 
lands  were  worth  twenty  dollars  an  acre,  and  Nichols  testified 
that  he  has  since  sold  them,  each  quarter  for  $4,000,  to  innocent 
purchasers,  without  notice  of  the  equities  of  the  parties,  and  that 
Price  has  been  for  years  wholly  Insolvent. 

About  the  evidence,  there  seems  to  be  but  little  difference  as  to 
what  it  proves,  but  the  question  in  controversy  is,  whether  the 
release  of  the  prior  mortgages,  after  the  execution  of  the  new 
note  was  such  an  act  as  wouhl  release  the  securities  to  the  new 
note,  and  if  so,  whether,  as  the  note  is  joint  and  several,  without 
in  any  manner  disclosing  the  fact  that  any  of  the  makers  are 
securities,  that  fact  may  be  shown  by  extrinsic  evidence.  In  all 
proceedings  between  themselves  the  makers  may  show  their  rela- 
tions to  the  transaction  by  evidence  outside  of  the  note  or  obliga- 
tion. And,  while  there  is  some  diversity  in  the  decisions  of  the 
various  courts  as  to  whether,  in  a  suit  at  law  by  the  pa^^ee  against 
the  makers,  they  may  aver  and  prove  that  a  portion  of  them  are 
merely  securities,  and  that  they  have  been  released  as  such  by  the 
acts  of  the  payee.  But  the  rule  is  settled  in  this  court  that  the 
defense  may  be  made  at  law,  as  well  as  in  equity.  Flynni'.  Mudd 
&  Hughes,  27  111.  328;  Drew  v.  Drury,  31  III.  "250;  Kennedy  v. 
Evans,  Id.  258. 

It  is,  however,  urged  that  there  is  a  distinction  between  a  note 
under  seal  and  an  unsealed  instrument.  That  the  law  has  made 
a  distinction  in  a  class  of  cases,  for  some  purposes,  is  unquestion- 
ably true.     It  has  declared  that  some  instruments,  if  not  under 

454 


CH.  XV.]  SURRENDER    OF   SKCUKITIES.  ILL.   CAS. 

seal,  shall  be  inoperative  to  accomplish  the  purpose  for  which  they 
are  executed.  It  is  so  of  a  deed  for  the  conveyance  of  real  estate, 
a  bill  of  exceptions,  and  some  otlier  instruments  ;  but  the  reason 
of  such  a  requirement  has  long  since  ceased,  and  it  is  now  only 
necessary  because  of  the  imperative  demands  of  the  law.  Our 
statute  making  notes  assignable,  whether  under  seal  or  not,  has, 
to  that  extent  and  for  that  purpose,  abolished  all  distinction 
between  the  two  classes  of  paper.  The  one  is  negotiable  as  well 
as  the  other,  and  the  same  incidents  attach  to  one  class  as  the 
other.  This  statute  abolishes  many  of  the  common-law  distinc- 
tions which  affected  choscs  in  action.  At  common  law  these  in- 
struments were  not  assignable  so  as  to  pass  the  legal  title  to  the 
instrument;  but  this  statute  authorizes  it  to  lie  done  precisely  as 
by  the  indorsement  of  a  bill  of  exchange.  It  also  permits  the 
coromon-law  presumption  of  a  consideration  ior  the  instrument 
which  a  seal  creates,  to  be  rebuUed  and  overcome  by  averment 
and  proof  ;  and  we  are  at  a  loss  to  perceive  why  the  presumption 
that  all  the  makers  are  })rincipals,  may  not  be  overcome  in  the 
same  manner.  The  statute  has  permitted  an  averment  against 
the  legal  implication  created  by  the  use  of  a  seal,  and  no  valid 
reason  has  been  urged,  and  none  occurs  to  us,  why  the  other 
inference,  that  all  of  the  makers,  in  tlie  absence  of  a  statement 
in  the  instrument  tliat  they  are  not,  may  not  be  overcome  in 
the  same  manner  and  to  an  equal  extent,  where  the  note  is  under 
seal,  as  where  it  is  unsealed.  The  same  reasons  seem  to  apply 
with  equal  force. 

We  now  come  to  the  consideration  of  the  other  and  more 
important  question,  which  involves  the  mei'its  of  the  contro- 
versy. The  doctrine  is  well  and  almost  uniformly  established, 
that,  in  equity,  tlie  mc  re  change  of  the  form  of  the  debt  does 
not,  as  between  the  parties  to  the  transaction,  change  the  secur- 
ity ;  that  the  mortgage  is  the  incident  and  follows  the  del)t  in 
its  various  changes,  whether  by  renewal,  judgment  or  otherwise. 
"When  the  new  note,  therefore,  was  executed  in  this  case,  unless 
there  had  been  an  agreement  to  that  effect,  it  did  not  change  the 
lien  of  the  del)t  upon  tiie  land  created  by  the  mortgages,  espe- 
cially when  no  further  security  was  taken.  The  parties  to  this 
note  were  the  same  persons  who  had  executed  the  original  notes, 
except  Glimpsie.  So  far,  then,  from  taking  furtlier  security,  a 
portion  of  that  already  held  was  discliarged.  Even  then,  if  taking 
further  security  could  have  operated  to  discharge  tlie  mortgages, 
that  cannot  be  insisted  upon  in  tills  case.  The  new  note  was 
given  to  the  creditor  in  the  first  notes,  and  there  was,  in  that 
respect,  no  substantial  change  in  the  transaction. 

These  mortgages  were  a  continuing  security  for  the  purchase- 
money,  were  on  record,  and  notice  to  the  world,  until  they  were 
subsequently  satisfied  by  the  creditor,  without  the  assent  of  the 
sureties.  Any  person  dealing  with  the  land  and  seeing  these 
mortgages  would  have  been  led  to  make  in(|uiries  whetlier  they 
had  been  discharged  by  payment  or  extinguishment  of  the  debts, 

4.55 


ILL.  CAS.  SURRENDER    OF    SECURITIES.  [CH.  XV. 

and  upon  such  inquiry  of  the  persons  to  whom  they  pointed  for 
information,  they  would  have  learned  the  true  situation  of  the 
transaction.  It  appears  that  the  lands  embraced  in  the  mort- 
gages were  amply  sufficient  in  value  to  have  more  than  discharged 
the  indebtedness.  They  were  also  the  first  and  superior  liens  on 
the  land,  the  subsequent  creditors  having  procured  their  mort- 
gages subject  to  this  incumbrance.  It  also  appears  that  Price, 
the  principal  in  the  new  note,  had  become  insolvent,  and  the  debt, 
if  paid,  would  have  to  be  by  the  other  parties  to  the  note.  That 
appellant  is,  therefore,  injured,  there  can  seem  to  be  no  doubt. 

Had  there  been  no  release  of  these  mortgages,  the  sureties, 
upon  paying  voluntarily,  or  being  compelled  to  pay  the  debt,  would 
have  been  subrogated  to  the  rights  of  the  creditor  and  could  have 
enforced  the  lien  in  equity  and  bad  the  money  thus  paid  refunded 
to  them.  But  by  their  satisfaction  and  the  release  of  the  lien, 
other  innocent  parties  have  acquired  rights  that  operate  to  cut 
off  their  remedy  against  the  land,  and  to  this  the  sureties  never 
gave  their  assent,  nor  do  we  see  that  they  have  ever  ratified  the 
action  of  the  township  treasurer.  In  this  they  have  been 
deprived  of  important  rights. 

But  may  this  defense  be  interposed  in  an  action  at  law?  "We 
have  repeatedly  held  that  the  release  of  a  principal  by  a  valid 
agreement  for  the  extension  of  time  for  payment,  without  the 
consent  of  the  surety,  operates  as  a  discharge,  and  he  may  avail 
of  the  defense  in  an  action  at  law.  This  defense  depends  upon 
different  principles,  as  in  this  class  of  cases  the  original  contract 
is  not  changed  in  terms  between  any  of  the  parties,  but  a  col- 
lateral indemnity,  held  in  trust  by  the  creditor,  and  upon  which 
the  surety  has  a  riglit  to  rely,  has  been  destroyed,  and  he  is  pre- 
sumed to  have  suffered  loss  by  the  surrender  of  the  security. 
The  creditor,  having  misapplied  the  trust  fund  and  acted  in  bad 
faith  toward  the  surety,  must  be  held  to  have  released  the  surety 
in  equity,  or,  rather,  to  be  estopped  from  looking  to  him  for  pay- 
ment, by  reason  of  his  bad  faith  in  discharging  his  duty  to  the 
trust  fund  held  for  their  common  security. 

It  is  certainly  true  that  where  a  pledge  of  real  or  personal 
property  has  been  given  by  the  principal  debtor,  to  secure  the 
debt,  such  securities  enter  into  and  form  part  of  the  elements 
of  the  transaction,  and  must  be  presumed  to  have  operated  as  an 
inducement  to  the  surety  to  incur  his  liability.  Such  securities 
are  regarded  by  him  as  a  means  of  safety,  and  according  to  the 
usual  course  of  business  he  is  entitled  to  rely  upon  them  as  an 
indemnity  against  ultimate  loss.  And  for  the  same  reason  that  a 
creditor  may  not  prevent  the  surety  from  resorting  to  recourse 
upon  his  principal,  he  cannot  prevent  him  from  protecting  himself 
against  ultimate  loss  by  looking  to  the  securities  which  have  been 
pledged  for  the  payment  of  the  debt.  The  surety  has  as  ample  a 
right  to  avail  himself  of  the  indemnity  such  securities  afford,  as 
he  has  to  resort  to  his  principal.  And  any  destruction  of  such 
collateral  securities  by  the  creditor  must  be  held  as  releasing  a 

456 


CH.  XV.]  SURRKNDEE   OF    SECUlilTIES.  ILL.  CAS. 

surety,  at  least  lo  the  extent  of  their  value.  Copel  v.  Butler,  2 
Simons,  457;  Hayes  v.  Ward,  4  Juhn.  Ch.  R.  123.  This  seems 
to  be  the  uniform  rule  in  equitj-. 

Under  the  mure  stringent  and  technical  rules  of  the  ancient 
common  law  it  was  held  that  relief  could  only  be  had  in  equity  to 
discharge  a  surety.  But  under  the  tendency  of  modern  decisions 
substance  is  more  regarded  than  mere  form,  and  tlie  doctrine 
seems  now  to  be  recognized,  that  whatever  discharges  a  secuiily 
in  equity  may  be  interposed  in  a  suit  at  law,  unless  there  be  such 
a  complication  of  interests  as  would  prevent  a  court  from  afford- 
ing adequate  relief.  And  although  relief  may  be  had  in  both 
courts  the  chancellor  will  not  send  a  case  to  acourtof  lawtoseek 
his  defense.  Samuel  v.  Howarth,  2  Mer.  287  ;  IMayhew  v.  Circkett, 
2  Swanst.  185  ;  HMwkshaw  v.  Parkins,  II).  539  ;  Eyre  v.  Everett, 
2  Russ.  382;  Mackintosh  v.  Wyatt,  3  Hare,  567;  Moore  v. 
Bowm.iker,  G  Taunt.  379;  Melville  v.  Glendenning,  7  Taunt. 
126  ;  Philpot  v.  Bi  iant,  4  Bing.  717.  And  we  can  see  no  reason 
why  a  court  of  law  is  not  as  competent  to  try  the  defense  as  that 
of  equity,  and  no  practical  benefit  is  perceived  in  compelling  the 
security  to  resort  to  the  more  tedious  and  expensive  mode  of  trial 
to  obtain  a  discharge.  We  are  therefore  inclined  to  follow  these 
authorities  and  peiinit  this  defense  to  be  made.  We  are  there- 
fore of  the  opiiiiou  that  appellant  has  established  a  comfjlete 
defense  on  his  part  to  the  note,  and  that  the  court  below  erred 
in  rendering  judgment  against  him.  Tlie  judgment  of  the  court 
below  is  reversed  and  the  cause  remanded.     Judgment  reversed. 

457 


CHAPTER     XVI. 

CHECKS. 

Section  164.  Check  distinguished  from  a  bill  of  exchange. 

165.  Checks  are  drawn  on  a  bank  or  banker. 

166.  Check  payable  on  demand  and  without  grace. 

167.  The  form  and  formalities  of  the  check. 

168.  Certification  of  checks. 

169.  Negotiation  and  transfer  of  checks. 

170.  Memorandum  checks. 

171.  Presentment,  notice  and  protest  of  checks. 

172.  "Within  what  time  must  check  be  presented. 

173.  Presentment  of  check  by  mail  and  by  deposit. 

174.  "What  will  excuse  failure  or  delay  in  demand  and  notice. 

175.  "When  is  a  check  stale  or  overdue. 

176.  Effect  of  death  of  drawer, 

177.  Right  of  checkholder  to  sue  the  bank. 

§  164.   Check  distinguished  from  a  bill  of  exchange. — 

A  check  may  be  defined  to  be  a  draft  or  order,  having 
essentially  the  characteristics  of  a  bill  of  exchange,  and 
differing  from  the  bill  (1)  in  being  drawn  on  a  bank  or 
banker,  (2)  apparently  and  presumptively  against  a  deposit 
of  funds,  and  (3)  payable  on  demand  and  without  days  of 
grace.  In  other  particulars,  checks  may  be  said  to  resemble 
bills  of  exchange,  except  so  far  as  other  points  of  dif- 
ferentiation may  be  explained  in  the  succeeding  paragraphs. 

§  165.  Checks  are  drawn  on  a  bank  or  banker. —  When 
one  deposits  money  at  a  bank  or  with  a  banker,  he  does  so 
with  the  implied,  if  not  expressed,  agreement  on  the  part 
of  the  bank  or  banker,  that  all  orders  for  the  payment  of 
money  to  a  third  person,  drawn  by  the  depositor  against 
the  deposit,  will  be  paid  on  demand,  as  long  as  the  fund  on 
deposit  has  not  been  exhausted  by  such  drafts  or  order. 
In  the  case  of  a  bill  of  exchange,  which  is  drawn  by  a 
creditor  on  some  debtor,  there  is  no  prior  agreement  to  pay 
any  money  to  a  third  person  on  account  of  the  indebtedness 
458 


CH.  XVI.]  CHECKS.  §    166 

due  to  the  drawer.  This  constitutes  one  of  the  important 
distinctions  between  a  bill  of  exchange  and  a  check. 
Hence  the  proposition,  that  a  check  must  be  drawn  on  a 
corporation  or  person,  sustaining  to  the  party  drawing  the 
obligation  of  a  bank  or  banker.^  But  the  other  essential 
characteristics  of  a  check  must  also  be  present,  in  order 
that  an  order  on  a  bank  or  banker  may  be  properly 
described  as  a  check.  A  strictly  so-called  bill  of  exchange 
may  be  drawn  on  a  bank  or  banker. ^ 

It  is  presumed  that,  when  one  draws  on  a  bank  or  banker, 
the  check  is  drawn  against  a  fund  on  deposit.  But  while 
there  is  authority  for  the  statement  that  an  order  for  the 
payment  of  money,  drawn  against  a  bank  or  banker,  with 
whom  there  is  no  fund  ou  deposit,  is  a  bill  of  exchange  and 
not  a  check  ;^  and  presumably,  this  is  the  general  rule, 
where  the  drawer  never  did  have  a  deposit  account  with 
the  drawee;  yet,  probably,  it  may  be  accepted  as  a  well- 
settled  rule,  that  the  temporary  want  of  a  sufficient  deposit 
fund  would  not  make  the  order  on  a  bank  or  banker  any 
less  a  check.  And,  in  any  case,  the  lack  of  a  fund  of 
deposit  would  not  change  the  character  of  the  order,  as 
agHin>t  a  bona  fide  holder.^ 

§  16(5.   Check    payable    on    demand    without  grace. — 

Although  there  are  cases,  which  hold  that  a  check  may  be 
made  payable  at  a  future  day,  or  in  any  other  way  than  on 
demand  ;°the  weight  of  authority  is  in  favor  of  recognizing, 

1  Espy  V.  Bk.  of  Cincinnati,  18  Wall.  604;  Merchants'  Bank  v.  State 
Bank,  10  Wall.  fi04;  Bowen  v.  Newell,  8  N.  Y.  190;  s.  c.  13  N.  Y.  290  (64 
Am.  Dec.  550). 

-  Georgia  Nat.  Bk.  v.  Henderson,  46  Ga.  487  (12  Am.  Rep.  51)0). 

3  Planters'  Bk.  v.  Kesee,  7  Ileisk.  200;  Keene  v.  Beard,  8  C.  B.  N.  S. 
372. 

<  Espy  V.  Bank  of  Cincinnati,  18  Wall.  004;  Champion  v.  Gordon,  70 
Pa.  St.  474  (10  Am.  Rep.  681):  Morrison  v.  Bailey,  5  Ohio  St.  13  (64  Am. 
Dec.  632) ;  Newman  v.  Kaufman,  28  La.  Ann.  805  (20  Am.  Rep.  114). 

5  Westminster  Bk.  v.  Wheaton,  4  R.  I.  30;  Way  v.  Towle,  155  Mass. 
374  (29  N.  E.  506);  Matter  of  Brown,  2  Story,  502;  Bowen  v.  Newell,  13 
N.  Y.  290  (04  Am.  Dec.  550  (the  conclusion  being  made  to  rest  on  local 
business  custom) ;  Champion  v.  Gordon,  70  Pa.  St.  474  (10  Am.  Rep.  681) 
(do.). 

459 


§   167  CHECKS.  [Cll.  XVI. 

as  one  of  the  indispensable  requirements  of  a  check,  that 
it  be  payable  on  demand  and  without  days  of  grace. ^ 

§  167.   The  form  and  formalities  of  the  check. —  The 

form  and  formalities  of  the  check  differ  but  little  from 
those  of  a  bill  of  exchange.  Like  other  kinds  of  commer- 
cial paper,  the  check  contains  a  date,  although  it  is  not 
essential  to  its  validity. ^  And  it  is  a  rather  common 
occurrence  for  a  check  to  be  post-dated,  i.  e.,  to  bear  date 
at  a  later  day  than  that  on  which  it  is  actually  negotiated. 
The  purpose  of  post-dating  a  check  is  to  enable  it  to  be 
negotiated  immediately,  while  it  is  not  payable  until  the 
future  day;  having,  as  to  the  time  of  payment  the  effect 
of  a  bill  of  exchange,  but  in  other  respects  that  of  a  check. ^ 
While  the  bank  may  pay  a  post-dated  check  before  its  date 
to  its  real  owner  it  cannot  debit  the  account  of  the  depositor 
before  the  given  date;  and  it  takes  the  check  subject  to  the 
subsequent  proof  of  title  in  another,  where  the  check  is 
payable  to  bearer.* 

All  the  various  requisites  of  negotiable  paper,  as  they 
have  been  explained  in  Chapter  II,  must  be  complied 
with  in  the  case  of  a  check  ;"  such  as  payment  in  money, 
and  certainty  as  to  amount,  time  and  the  person  to  whom 
payment  shall  be  made.  Words  of  negotiability  are 
required  to  make  a  check  negotiable  ;  but  their  absence 
does  not  affect  the  character  of  the  check  other  than    to 

1  Bradley  v.  Delaplaine,  5  Harr.  305;  Andrew  v.  Blackley,  11  Ohio  St. 
89;  Georgia  Nat.  Bank  v.  Henderson,  i6  Ga.  487  (12  Am,  Rep.  590); 
Wood  River  Bk.  v.  First  Nat.  Bk.,  36  Neb.  744  (55  N.  W.  239) ;  Ivory  v. 
Bk.  of  the  State,  36  Mo.  475  (88  Am.  Dec.  150);  Harrison  v.  Nicollet 
Nat.  Bk.,  41  Minn.  488  (43  N.  W.  336);  Minturn  v.  Fisher,  4  Cal.  35; 
Brown  v.  Lusk,  4  Yers.  210. 

2  Exchange  Bk.  v.  Sutton  Bk.,  78  Md.  577  (28  A.  563). 

3  Salter  v.  Burt,  20  Wend.  205  (32  Am.  Dec.  530) ;  Matter  of  Brown,  2 
Story,  502;  Taylor  v.  Sip,  29  N.  J.  L.  (1  Vroom.)  284. 

4  Wheeler  v.  Guild,  20  Pick.  545  (32  Am.  Dec.  231);  Bristol  Knife  Co. 
V.  First  Nat.  Bk.,  41  Conn.  421  (19  Am.  Rep.  517);  Second  Nat.  Bk.  v. 
Averill,  2  App.  D.  C.  470. 

«  See  Smith  v.  Smith,  1  R.  I.  398  (53  Am.  Dec.  652)  ;  Northrop  v.  San- 
born, 22  Vt.  433  (54  Am.  Dec.  83);  Wells  u.  Brigham,  6  Cush.  6  (52  Am. 
Dec.  750) ;  Corgau  v.  Frew,  39  111.  31  (89  Am.  Dec.  286). 
460 


en.  XVI.]  CHECKS.  §  108 

make  it  non-negotiablo.^  It  was  once  the  English  law 
that  a  bank  was  not  obliged  to  honor  a  check  which  was 
payable  to  OKler;^  and  the  act  of  Parliament,  making 
the  change  in  the  law,  only  rcciuires  the  banks  to  honor 
such  checks,  but  relieves  them  of  all  liability,  if  they 
should  make  payment  on  such  a  check  on  a  forged  in- 
dorsement to  the  wrong  person.  But  in  the  United 
States,  banks  are  universally  required  by  custom  to  honor 
checks  payable  to  order,  and  pay  them  at  their  peril 
to  any  other  persons  than  those  to  whom  they  are  made 
payal)le,  or  to  whom  they  have  been  duly  indorsed  by  the 
original  payee  or  indorsee,^  But  if  payment  is  made  to 
the  rightful  holder,  it  will  be  a  good  debit  to  the  account  of 
the  depositor,  although  it  is  payable  to  order  and  has  not 
been  indorsed  by  hini.^ 

In  respect  to  the  address  of  the  drawee,  the  check  differs 
somewhat  from  a  liill  of  exchange.  In  a  bill  of  exchange, 
the  drawee's  address  is  almost  invariably  in  the  left-hand 
corner,  at  the  bottom.  In  a  check,  the  address  of  the 
bank  is  usually  written  or  printed  in  large  letters  across 
the  top,  just  below  the  date  and  place  of  execution.  But 
this  is  not  an  essential  difference;  and  the  character  of  the 
order  or  draft  is  in  nowise  affected  by  any  departure  from 
custom  in  this  respect.® 

§  1()8.  Certification  of  checks. —  Since  the  check  is  in- 
tended to  be  paid  immediately  and  on  demand,  the  parties 
cannot  be  said  to  have  contemplated  any  presentment  for 
acceptance,  it  being  payable  whenever  there  is  a  present- 
ment for  any  puipose.  There  is,  therefore,  no  authority 
from  the  drawer   to   the  })ayee  to  secure  acceptance  of  a 

1  See  Escliange  Bk.  v.  Sutton  Bk.,  78  Md.  577  (28  A.  663). 

2  Bellamy  v.  Majoribanks,  8  Eng.  L.  &  Eq.  517. 

8  Bowen  v.  Newoll,  8  N.  Y.  100;  Graves  v.  Am.  Exch.  Bank,  17  N.  Y. 
205;  Seventh  Nat.  Bank  v.  Cook,  73  Pa.  St.  483  (13  Am.  Rep.  751) ;  Dodge 
V.  Nat.  Exch.  Bk.,  30  Ohio  St.  1;  Mcintosh  v.  Lytle,  23  Minn.  33(i  (37 
Am.  Rep.  410). 

<  Freund  v.  Imp.  &  Trad.  N.  Bk.,  7C,  N.  Y.  352. 

^  Kavanaugh  r.  Farmers'  Bk.  of  Maitland,  59  Mo.  App.  540;  Bull  v. 
First  Nat.  Bk.,  123  U.  S.  105. 

401 


§   168  CHECKS.  [CH.  XVI. 

check  and  put  it  in  circulation,  as  is  universally  true  in  the 
case  of  a  bill  of  exchange.  Yet  the  necessities  of  the  com- 
mercial workl  have  required  this  to  some  degree.  A  cus- 
tom has  grown  up,  and  lately  assumed  immense  proportions 
in  the  large  commercial  centers,  for  the  bank,  on  which  a 
check  is  drawn,  to  enter  into  a  positive  agreement  with  the 
holder  to  pay  the  check  whenever  it  is  presented.  This  is 
called  the  certification  of  the  check. 

Certification  has  been  said  to  be  '*  the  equivalent 
of  acceptance."  ^  But  this  is  not  strictly  true  in 
every  particular ;  and  the  effect  of  certification  varies 
materially  according  to  the  circumstances.  If  the  cer- 
tification is  given  by  the  bank,  at  the  solicitation  of 
the  holder,  the  drawer  and  prior  indorsers  are  completely 
discharged  from  all  liability  for  the  payment  of  the  check, 
and  the  holder  must  look  solely  to  the  bank.^  But  if  the 
bank  certifies  the  check  at  the  request  of  the  drawer,  and 
before  its  delivery  to  the  payee,  the  drawer  is  still  liable, 
and  the  certification  has  the  same  effect  as  does  the  accept- 
ance of  a  bill  of  exchange.^  In  every  other  respect,  the 
certification  is  the  equivalent  of  acceptance.  The  bank,  on 
certifyiug  a  check,  is  precluded  from  afterwards  question- 
ing the  genuineness  of  the  drawer's  signature,  as  against 
the  claims  of  a  bona  fide  holder,  although  it  does  not 
guarantee  that  the  body  of  the  bill  or  indorsements  are 
genuine.*     Nor  can  the  bank  afterwards  refuse  to  pay  the 

1  Merchants'  Bank  v.  State  Bk.,  10  Wall.  60t,  G47. 

2  First  Nat.  Bk.  v.  Leacb,  52  N.  Y.  350  (11  Am.  Rep.  708) ;  Seventh 
Nat.  Bank  v.  Coot,  73  Pa.  St.  483  (13  Am.  Rep.  751);  Girard  Bk.  v.  Bk. 
of  Penn.  Twp.,  39  Pa,  St.  92;  Metropolitan  N.  Bk.  v.  Jones,  137  111.  634 
(27  N.  E.  533)  ;  Cont,  Nat.  Bk.  v.  Cornhauser,  37  111.  App,  475;  Essex  Co, 
N.  Bk.  V.  Bk  of  Montreal,  7  Biss.  197;  Bullard  v.  Randall,  1  Gray,  605  (61 
Am.  Dec.  433). 

3  Minot  V.  Russ,  156  Mass.  458  (31  N.  E.  489);  Randolph  N.  Bk.  v. 
Hornblower,  160  Mass.  401  (35  N.  E.  850);  Cincinnati  &c.  Fish  Co.  u. 
Nat.  Lafayette  Bank,  51  Ohio  St.  106  (36  N.  E.  833). 

^  Espy  V.  Bk.  of  Cincinnati,  18  Wall.  604;  Security  Bk.  v.  Continental 
Bk.,  64  N.  Y.  31G;  Clews  v.  N.  Y.  Nat.  Bk.  Assn.,  89  N.  Y.  418  (V2  Am. 
Rep.  303j  ;  First  Nat.  Bk.  v.  N.  W.  Nat.  Bk.,  40  111.  App.  640 ;  s.  c.  152  111, 
296  (38  N,  E.  739). 

462 


CH.  XVI.]  CHECKS.  §   168 

check,  because  there  were  no  funds  on  deposit  to  cover  the 
check;  although,  if  the  check  has  been  certified  to  by  mis- 
take, the  certification  can  be  recalled,  if  it  is  done  before 
the  check  has  been  further  negotiated. ^ 

The  customary  form  of  certification  of  a  check  is  for 
some  duly  authorized  officer  of  the  bank  to  write  across 
the  face  of  the  check  the  word  "  good"  or  "certified" 
and  sign  his  name  or  write  his  initials. ^  But  the  form 
does  not  appear  to  be  of  any  great  moment.  It  may  be 
written  on  a  separate  pM[)er,  or  may  be  communicated  by 
telegraph.''  And  it  seems  that,  in  the  absence  of  statutory 
requirement  to  the  contrary,  a  verbal  certification  will  bind 
the  bank,  if  it  be  communicated  to  the  payee  or  other  holder 
of  the  check. ^ 

In  the  absence  of  express  authorization,  by  the  board  of 
directors  of  a  bank,  the  only  officers  who  have  impliedly 
the  authority  to  bind  the  bank  by  the  certification  of  a 
check,  are  the  president,  cashier  and  teller.^     But  no  officer 

1  Irving  Bk.  v.  Wetherald,  36  N.  Y.  335;  Watervliet  Bank  v.  White,  1 
Denio,  608 ;  Bk.  of  Republic  v.  Baxter,  31  Vt.  101 ;  Second  Nat.  Bk.  v.  West 
Nat.  Bk.,  61  Md.  128  (34  Am.  Kep.  300).  The  certification  is  not  absolutely 
binding  on  the  bank,  except  as  against  a  bona  fide  holder.  Where,  there- 
fore, a  certified  check,  payable  to  order,  is  transferred  without  indorse- 
ment, the  subsequent  holders  cannot  hold  the  bank  liable,  where  the 
certification  has  beeu  procured  by  fraud  or  misrepresentation.  Goshen 
Nat.  Bk.  V.  Bingham,  118  N.  Y.  349  (23  N.  E.  180).  And  in  any  case,  the 
holder  must  prove  title.  Lynch  v.  First  Nat.  Bk.,  107  N.  Y.  179  (13  N.  E. 
775). 

2  Barnet  v.  Smith,  30  N.  H.  256  (64  Am.  Dec.  290). 

"  Henrietta  Nat.  Bk.  v.  State  Nat.  Bk.,  80  Tex.  648  (16  S.  W.  321). 

*  Carr  v.  Nat.  Security  Bk.,  107  Mass.  45  (9  Am.  Rt-p.  6);  Pope  w. 
Bank  of  Albion,  59  Barb.  226;  National  State  Bk.  v.  Liudermau,  161  Pa. 
St.  199  (statute  roquiring  writing)  (28  A.  1022);  Nelson  v.  First  Nat. 
Bank,  48  111.  36  (95  Am.  Dec.  510);  Garretson  v.  North  Atchison  Bk.,  39 
Fed.  1(;3;  47  Fed.  867  (telegram).  But  see  contra.  Espy  i'.  Bank  of  Cin- 
cinnati, 18  Wall.  604;  Farmers'  &,  Trad.  Bk.  v.  Carter  Co.,  88  Tenn.  279 
(12  S.  W.  545);  Kahn  v.  Walton,  46  Ohio  St.  195  (20  N.  E.  203),  holding 
that  a  verbal  statement  that  a  check  is  good,  does  not  necessarily  in- 
volve a  positive  promise  that  it  will  be  paid. 

fi  Merchant's  Bk.  v.  State  Bk.,  10  Wall.  604;  Meads  v.  Merchants'  Bk. 
of  Albany  25  N.  Y.  143;  Claflin  v.  Farmers'  &c.  Bk.,  25  N.  Y.  293;  Cooke 
V.  State  Nat.  Bk.,  52  N.  Y.  96  (11  Am.  Rep.  667).  But  see  Atlantic  Bk. 
V.  Merchants'  Bk.,  10  Gray,  532. 

463 


§   170  CHECKS.  [CH.  XVI. 

has  the  authority  to  certify  a  check  drawn  by  one  who  has 
not  sufficient  funds  on  deposit  to  cover  it,  and  no  one  but 
a  bona  fide  holder  can  hoM  the  baiili  liable  on  such  a  cer- 
tification.^ Nor  can  any  officer  of  a  bank  certify  a  post- 
dated check  i)rior  to  the  given  date  of  the  check.^ 

The  certification  of  a  check  does  not  give  the  holder  any 
specific  lien  on  the  assets  of  the  bank.^ 

§  169.  Negotiation  and  transfer  of  checks. —  Like  bills 
of  exchange  and  promissory  notes,  a  check,  payable  to 
bearer,  is  transferable  by  delivery  without  indorsement. 
And  while  it  is  more  or  less  customary  for  a  bank  to  ask 
for  the  indorsement  of  the  person  to  whom  payment  is 
made,  such  indorsement  is  only  intended  to  secure  evidence 
and  identification  of  the  payee,  and  does  not  impose  upon 
him  the  liability  of  an  indorser,  unless  it  is  shown  that  he 
signed  aiiimo  indorsandi.  If  the  check  is  payable  to  order, 
indorsement  by  the  puyee  and  indorsees  is  necessary  to 
the  transfer  of  the  full  legal  title  to  the  check.* 

§  170.  Memorandum  cbecks. —  A  peculiar  form  of 
check  has  come  into  use  in  certain  business  communities, 
which  is  known  as  the  memorandum  check.  This  is 
described  to  be  "  a  con'.ract  by  which  the  maker  engages 
to  pay  the  bona  fide  holder  absolutely,  and  not  upon  a  con- 
dition to  pay  upon  presentation  at  maturity,  and  if  due 
notice  of  the  presentation  and  non-payment  should  be  given. 
The  word  '  memorandum,'  written  or  printed  upon  the 
check,  describes  the  natuie  of  the  contract  with  precis- 
ion."^   It  is  in  the  nature  of  a  due  bill,  the  only  material  dif- 

1  Atlantic  Bk.  v.  Merchants'  Bk.,  10  Gray,  532;  Cooke  v.  State  Nat.  Bk., 
62  N.  Y.  96  (11  Am.  Rep.  667). 

2  Clarke  Nat.  Bk.  v.  Bk.  of  Albion,  52  Barb.  592. 

3  People  V.  St.  Nicholas  Bk.,  77  Hun,  159. 

4  Hoyt  V.  Seeley,  18  Conn.  353;  Keene  v.  Beard,  8  C.  B.  N.  S.  372; 
Cruger  v.  Armstrong,  3  Johns.  5  {2  Am.  Dec.  126) ;  Conroy  v.  Warren,  3 
Johns.  259  (2  Am.  Dec.  156);  Merchants'  Bk.  v.  Spicer,  6  Wend.  445; 
Glen  V.  Noble,  1  Blatchf .  105;  Humphries  v.  Bicknell,  2  Litt.  296  (13  Am 
Dec.  268). 

^  Franklin  Bk.  v.  Freeman,  16  Pick.  535. 
404 


CH.  XVI.]  CHECKS.  §    171 

ference  being  that  the  bank,  whose  name  appears  upon  the 
check,  is  impliedly  authorized  by  the  maker  to  pay  it  like 
any  ordinary  check,  and  to  debit  the  depositor's  account 
with  the  amount.^ 

§  171.   Presentment,   notice  and  protest  of    checks. — 

Except  in  the  case  of  memoraiiduni  checks,  it  is  as  neces- 
sary, in  order  to  hold  the  drawer  and  indorsers,  to  observe 
the  rules  in  respect  to  presentment  for  payment,  protest 
and  notice  of  dishonor,  where  the  instrument  is  a  check, 
as  where  it  is  a  hill  of  exchange  or  promissory  note.^ 
But  there  is  this  diflerence  between  bills  and  checks  as  to 
consequences  of  negligence,  or  delay  in  demand  and  notice. 
Inasmuch  as  checks  are  payable  on  demand,  the  drawer  is 
not  discharged  by  any  such  delay  or  neglect,  unless  actual 
damage  can  be  proved  by  him  ;  as,  for  example,  by  proof 
of  the  failure  of  the  bank  after  the  negotiation  of  the  check, 
and  after  the  lapse  of  a  reasonable  time,  within  which 
the  check  could  have  been  presented  for  payment.  If  the 
bank  has  not  failed,  the  check  is  payable  whenever  pre- 
sented, and  the  drawer    is   not    discharged    by  the  delay .^ 

1  United  States  v.  Isham,  17  AVall.  49(J;  (.'ushin<j  v.  Gore,  15  Mass.  69; 
Kelly  V.  Brown,  5  Gray,  108;  Skillman  v.  Titus,  3  Vroora  (31  N.J.  L.) 
96;  Am.  Emigrant  Co.  v.  Clark,  47  Iowa,  671;  Dykers  v.  Leatlier  Mfg. 
Co.,  11  Paige,  612.  The  bank's  name  may  be  canceled;  and  if  it  is,  the 
party  holding  the  check  must  prove  tlie  consideration  affirmatively.  The 
l)resumption  of  consideration  is  destroyed  by  such  cancellation.  Ball  v. 
Allen,  15  Mass.  433;  Ellis  v.  Wheeler,  3  Pick.  18. 

2  Merchants'  Bk.  v.  State,  10  Wall.  604;  Iloyt  v.  Seeley,  18  Conn.  353; 
Ilarker  u.  Anderson,  21  Wend.  372;  Cruger  v.  Armstrong,  3  Johns.  5  (2 
Am.  Dec.  126);  Pollard  v.  Bowen,  57  Ind.  234;  Jones  v.  Heiliger,  36  Wis. 
149. 

8  Bull  V.  First  Nat.  Bk.,  123  U.  S.  105;  Burkhalter  v.  Second  Nat.  Bk., 
42  N.  Y.  538;  Mohawk  Bk.  v.  Broderick,  10  Wend.  309;  13  Wend.  133  (27 
Am.  Dec.  192);  National  State  Bk.  v.  Weil,  141  Pa.  St.  457  (21  A.  661); 
Taylor  v.  Sip,  29  N.  J.  L.  (1  Vroom)  284;  Exchange  Bk.  v.  Sutton  Bk., 
78  Md.  577  (28  A.  563);  Purcell  v.  AUeraong,  22  Gratt.  739;  Stewart  v. 
Smith,  17  Ohio  St.  83;  Ileartt  v.  Rhodes,  66  111.  351;  Stevens  v.  Park,  73 
111.  387;  Lowenstein  v.  Bresler,  109  Ala.  326  (19  So.  860);  Watt  w.  Cans 
(Ala.  '97),  21  So.  1011;  Morrison  v.  McCartney,  30  Mo.  183,  OfiEutt  v. 
Ilucker,  2  Ind.  App.  316;  Cork  v.  Bacon,  45  Wis.  192  (30  Am.  Rep.  712); 
First  Nat.  Bank  v  Linn  Co.  (Oreg.  '97),  47  P.  614;  Shaffer  v.  Maddox,  9 

4G5 


§172  CHECKS.  [CH.  XVI. 

But  the  indorsers  are  absolutely  discharged,  if  there  has 
not  been  due  presentment,  protest  and  notice  within  a 
reasonable  time,  whether  there  has  been  any  actual  damage 
or  not.i 

§  172.  Within  what  time  must  check  be  pre- 
sented. —  Inasmuch  as  the  failure  of  the  bank  before  pre- 
sentment is  the  principal,  if  not  the  invariable,  occasion  of 
loss  from  a  neglect  or  delay  in  making  presentment  for 
payment,  almost  any  dehiy  is  likely  to  produce  the  loss  ; 
and,  consequently,  but  a  limited  time  is  given  to  the  holder 
in  which  to  make  presentment,  the  length  of  time  varying 
according  to  the  method  of  negotiation  of  the  check,  and 
the  other  circumstances  of  the  particular  case.  The 
fundamental  idea  is  that  a  check  is  not  to  be  held  in 
possession  by  the  same  person  for  any  great  length  of 
time,  as  is  permissible  in  the  case  of  a  bill  or  note.  A 
payee  is  obliged  to  pass  the  check  by  transfer  to  another, 
or  by  presentment  to  the  bank,  within  twenty-four  hours 
after  his  receipt  of  it. 

If  the  drawer  and  payee  live  in  the  same  place  in  which 
the  bank  is  located,  the  pa\re  has  the  next  day,  in  w^hich 
to  make  presentment  for  payment,  if  he  does  not  transfer  it 
to  another  person.  If  he  holds  possession  of  the  check  for 
more  than  one  day,  and  the  bank  fails,  he  loses  his  remedy 
against  the  drawer    of    the    check. ^     Where    the    payee 

Neb.  205  (2  N.  W.  464).  But  see  Toraliu  v.  Thornton  (Ga.  '96)  ;  27  S.  E. 
147. 

1  Merchants'  Bk.  v.  Spicer,  6  Wend.  445;  Murray  v.  Judah,  6  Cow. 
490;  Little  v.  Phoenix  Bank,  2  Hill,  425;  Leonard  v.  Olson  (Iowa,  '96),  68 
N.  W.  677;  Humphries  v.  Bicknell,  2  Litt,  2<>6  (13  Am.  Dec.  268)  ;  Simp- 
son V.  Pac.  &c.  Ins.  Co.,  44  Cal.  143,  and  cases  cited  in  the  preceding 
and  succeeding  notes. 

2  O'Brien  v.  Smith,  1  Blar';,  99;  Smith,  v.  Miller,  43  N.  Y.  171  (3  Am. 
Rep.  690)  ;  Syracuse  &c.  R.  R.  Co.  v.  Collins,  57  N.  Y.  641;  aff' g  3  Lans. 
29  ;  Cox  V.  Boone,  8  W.  Va.  500  (23  Am.  Rep.  627)  ;  Morrison  v.  Bailey,  5 
Ohio  St.  13  (64  Am.  Dec.  632);  Eickford  tJ.FirstNat.  Bk.,  42  HI.  238  (89  Am. 
Dec.  436)  ;  Cawein  v.  Browinski,  6  Bush,  457  (99  Am.  Dec.  684)  ;  Holmes 
V.  Roe,  62  Mich.  199  (28  N.  W.  8G4) ;  Simpson  v.  Pac.  &c.  Ins.  Co.,  44 
Cal.  143;  Grange  v.  Reish  (Wis.),  67  N.  W.  1130;  Andrews  v.  Germ. 
Nat.  Bank,  9  Heisk.  211  (24  Am.  Rep.  300). 

466 


CII.  XVI.]  CHECKS.  §    172 

receives  the  check  at  a  distance  from  the  place  where  the 
f)ank  is  situated,  he  has  the  whole  of  the  day  after  receiv- 
ing it  in  w^hich  to  forward  tlie  ciiecklor  presentment  through 
an  appropriate  channel,  hy  mail  or  express,  to  the  place 
where  the  bank  is  located.  And  the  person  who  receives  it 
has  the  next  day  after  receiving  it,  in  which  to  make  pre- 
sentment. Any  loss,  arising  from  failure  of  the  bank 
during  the  time  needed  and  con>umed  in  tlie  transportation 
of  the  check,  will  fall  on  the  drawer.^  And  where  the 
banking  custom  of  the  place,  where  the  bank  is  located, 
is  to  make  presentment  through  the  clearing-house,  the 
consequent  delay  is  justifiable;  and  the  collecting  bank  or 
holder  of  the  check  is  not  liable  if  the  drawee  bank  fails, 
while  the  check  is  passing  through  the  clearing-house.^ 

But  the  payee  of  ca  check  need  not  send  it  direct  to  the 
bank  for  presentment.  lie  may  transfer  it  by  indorsement 
or  delivery  to  another.  And  the  indorsee  or  transferee  has 
the  next  day  after  receiving  the  check,  in  which  to  present 
for  payment  or  to  forward  it  for  presentment.  But  if 
more  time  has  elapsed  between  the  original  negotiation  of 
the  check  and  its  final  presentment  for  payment  by  the 
indorsee  or  holder  than  what  is  allowed  by  law  to  the 
payee,  the  drawer  is  discharged,  in  case  of  the  intermediate 
failuie  of  the  bank,  although  the  immediate  indorser  is  still 
bound.  The  law  does  not  permit  any  extension  of  the  risk 
of  the  drawer  by  a  series  of  transfers  by  indorsement  or 
by  deliver}'.  The  check  is  designed  for  immediate  present- 
ment, and  not  for  circulation.' 

1  Smitli  V.  Jonos,  20  Wend.  192  (32  Am.  Dec.  527);  Gregg  v.  Beane 
fVt.  'D7),  37  A.  248;  Loux  v.  Fox,  171  Pa.  St.  G8  (32  A.  190);  First  Nat. 
Bk.  V.  Buckliannon  Bk.,  80  Md.  475  (31  A.  302).  Itseems,  however,  that, 
where  the  payee  resides  in  the  country,  away  from  the  place  in  which  the 
bank  is  located,  a  longer  time  than  twenty-four  hours  \-i  allowed  within 
which  to  make  presentment.  Cox  v.  Boone,  8  W.  Va.  500  (23  Am.  Rep. 
G27). 

-  Willis  V.  Finley,  173  Pa.  St.  28  (34  A.  213);  contra.  Holmes  v.  Roe, 
02  Mich.  109  (28  N.  W.  8G4.) 

»  Cruger  t'.  Armstrong,  3  Johns.  5  (2  Am.  Dec.  12G)  ;  Mohawk  Bk.  v. 
Bruderick,  10  Wend.  3C4 ;  13  Wend.  133  (27  Am.  Dec.  192);  Rosenthal  v. 
Ehrlicher,  154  Pa.  St.  39(>  (2G  A.  435);   First  Nat.  Bk.  r.  Miller,  43  Neb. 

467 


§    173  CHECKS.  [CTI.  XVI, 

§  173.   Presentment  of  clH'''k  by  mail  and  by  deposit. — ■ 

It  is  probably  correct  to  say  that  the  ordinary  method  of 
forwarding  a  check  for  presentment,  where  it  is  negotiated  at 
a  distance  from  the  place  where  the  bank  is  situated,  is  by 
uKiil  or  express  to  some  third  person  or  independent  bank 
or  banker,  who  is  charged  with  the  duty  of  presenting  the 
check  for  }>ayment  to  the  bank  or  banker  on  which  it  is 
drawn.  But  a  custom  has  grown  up  of  late  to  send  the 
check  direct  to  the  baidi  on  which  it  is  drawn,  particularly 
where  the  paying  bank  is  the  correspondent  of  the  receiv- 
ing bank,  or  it  is  the  only  bank  in  the  place  of  its  location. 
The  propriety  and  sufficiency  of  this  method  of  present- 
ment has  been  denied,^  but  equally  weighty  authority 
justify  its  adoption. 2  It  is  al>o  a  very  common  practice 
for  one  depositor  to  deposit  to  hi-<  account  a  check  drawn 
in  his  favor  by  another  depositor.  In  such  a  case,  the 
bank  assumes  the  dual  obligation  of  collecting  and  l^aying 
the  check.  And  if  the  account  of  the  drawer  does  not  per- 
mit of  its  paj'ment,  it  has  been  held  that  the  check  may  be 
returned  to  the  depositor,  although  its  amount  has  been 
passed  to  his  credit.^ 

Where,  howcvei-,  checks  are  received  for  collection  by 
the  bank  on  which  they  are  drawn,  the  bank  has  until  the 
next  day  to  return  the  checks,  if  they  are  not  to  be  paid.* 
If  the  account  of  the  drawer  of  a  number  of  checks  does 


791  (G2  N.  W.  195) ;  Hamilton  v.  Winona  Salt.  &c.  Co  ,  95  Mich.  436  (54 
N.  W.  903) ;  Brown  v.  Lusk,  4  Yerg.  210;  GlEford  v.  Hardell,  88  Wis.  538 
(GO  N,  W.  1064);  Reid  v.  Reid,  11  Tex.  584;  Industrial  Tr.  &c.  Sav.  Co. 
V.  Weakley,  103  Ala.  458  (15  So.  854);  Watt  v.  Gans  (Ala.  '97),  21  So. 
1011. 

1  Farwell  v.  Curtis,  7  Biss.  160;  Wagner  v.  Crook,  167  Pa.  St.  259; 
31  A.  576  (collecting  bank  liable  for  any  loss)  ;  Anderson  v.  Rogers,  53 
Kan.  542  (36  P.  1067). 

2  Shipsey  v.  Bowery  Nat.  Bk.,  59  N.  Y.  485:  Indig  v.  Nat.  City  Bank, 
80  N.  Y.  100;  Nebraska  N.  Bk.  v.  Logan,  35  Neb.  182  (52  N.  W.  808). 

3  Nat.  Gold  Bk.  v.  McDonald,  51  Cal.  64  (21  Am.  Rep.  697).  But  see 
contra,  Pratt  v.  Foote,  9  N.  Y.  463;  Oddie  v.  Nat.  City  Bk  ,  45  N.  Y.  735 
(6  Am.  Rep.  160). 

4  Oberraan  v.  Hoboken  City  Bk.,  2  Vroom  (30  N.  J.  L.),  563;  Mer- 
chants' Nat.  Bk.  V.  Eagle  Nat.  Bk.,  101  Mass.  281  (100  Am.  Dec.  120). 

468 


CH.  XVI.]  CHECKS.  §    174 

not  show  a  siiflBcient  balance  to  pay  all  the  checks,  which 
may  be  presented  at  one  time,  the  duty  of  the  bank  is  to 
pay  the  checks  in  full,  in  the  order  in  which  they  have 
been  presented  for  payment  or  received  for  deposit  or  col- 
lection, a!id  not  to  distribute  the  balance  ^;/-o  ?'a^a  amonir 
the  checkholders.^ 

§  174.  What  will  excuse  failure  or  delay  in  demand 
and  notice. —  As  a  general  proposition,  it  may  be  stated 
that  the  same  causes  or  occurrences,  which  will  excuse 
failure  or  delay  in  the  due  presentment  and  protest  of  bills 
and  notes,  and  in  the  notification  of  their  dishonor,  apply 
to  similar  cases  arising  in  the  negotiation  and  handlingr  of 
checks.  And  the  reader  is  referred  to  a  preceding  chajjter  ^ 
for  a  general  discussion  of  these  satisfactory  excuses. 
The  most  common  excuses  in  the  cases  of  checks,  as 
against  the  drawer,  are  the  insolvency  of  the  bank  on 
which  the  check  is  drawn,  and  the  absence  of  funds  on 
deposit  to  the  credit  of  the  diawer.  Either  fact,  when 
knt.wn  to  the  holder,  will  excuse  his  failure  to  make  pre- 
sentment."^  The  holder  is  also  excused  from  demand  and 
notice,  as  against  the  drawer,  if  he  has  countermanded  the 
payment  of  the  check,  or  drawn  out  the  funds  on  deposit 
at  the  bank.^ 


1  Matter  of  Brown,  2  Story,  503;  Nat.  Safe  &  Lock  Co.  v.  People,  50 
III.  App.  33G.  And  if  two  checks  are  presented  simultaneously  whicb 
aggregate  more  than  the  balance  to  the  credit  of  the  drawer,  the 
bank  may  refuse  to  pay  both.  Dykers  v.  Leather  M'f'g  Bk.,  11  Paige 
612. 

2  Chapter  XIIL 

3  Beauregard  v.  KnowltoD,  156  Mass.  395  (31  N.  E.  389);  Iloyt  v. 
Seeley,  18  Conn.  353;  Couroy  v.  Warren,  3  Johns.  259  (2  Am.  Dec.  loi!) ; 
Brush  V.  Barrelt,  82  N.  Y.  400;  Exchange  Bk.  v.  Sutton  Bk  ,  78  Md.  577 
(28  A.  56;]);  Kirkpatrick  v.  Puryear,  93  Tenn.  409  (24  S.  W.  1130); 
Fletcher  v.  Pierson,  69  lud.  281  (35  Am.  Rep.  214);  Culver  v.  Marks,  li'2 
lad.  554  (23  N.  E.  108(;)  ;  Kinyon  v.  Stanton,  44  Wis.  479  (28  Am.  Rep. 
601);  Leonard  v.  Olson  (Iowa,  '97),  G8  N.  W.  677.  But  see  First  Nat. 
Bk.  V.  Miller,  37  Neb.  500  (55  N.  W.  1064). 

■•Jacks  V.  Darrin,  3  E.  1).  Smith,  558;  Industrial  Bank  of  Chicago  v. 
Bowes,  165  III.  70  f46  N.  E.  10);  Whalty  v.  Houston,  12  La.  Ann.  585r 
MiiUuru  V.  Fisher,  7  Cal.  573. 

4G9 


§    175  CHECKS.  [CH.  XVI. 

§  175.  When  is  a  check  stale  or  overdue. —  la  a  pre- 
cediog  section/  it  was  explained  what  expedition  in  the 
presentment  of  a  cheek  for  payment  was  required  by  the 
law,  in  order  to  hold  the  drawer  and  indorser  liable,  where 
the  bank  had  failed  in  the  meanwhile,  or  where  for  any 
other  reason  damage  has  been  suffered  by  the  drawer  of 
the  check  in  consequence  of  such  delay.  But  where  no 
such  loss  or  damage  is  thereby  incurred  by  the  drawer,  the 
delay  in  presentment  does  not  discharge  either  the  drawer 
or  indorser.  The  natural  inference  from  that  exposition 
of  the  law  would  be  that  a  check  is  always  due  and  payable, 
whenever  presented,  it  matters  not  how  long  the  delay  in 
presentment  continues,  short  of  the  statutory  period  of 
limitation.  And  this  -is  true,  where  the  check  is  not  sub- 
ject to  some  defense  which  could  be  successfully  set  up 
against  the  payee.  In  other  words,  in  order  that  an  in- 
dorsee or  transferee  of  a  check  may  claim  the  protection 
of  a  bona  fide  holder,  and  the  right  to  hold  and  enforce 
the  check,  free  from  the  defenses  not  appearing  on  its  face, 
the  check  must  have  been  transferred  wilhin  a  reasonable 
time  after  its  original  negotiation.  Generally  stated, 
the  lapse  of  time  must  not  have  been  so  long  that  in 
the  light  of  the  circumstances  of  the  particular  case, 
it  is  sufficient  to  arouse  the  suspicions  of  a  reasonably 
prudent  man  of  the  existence  of  son;3  defense  to  the 
enforcement  of  the  check.  The  actual  length  of  time, 
which  would  be  con-idered  sufficient  to  make  the  check 
stale  or  overdue,  varies  with  the  ciicumstances  of  each 
case. 2 

But  the  time  of  the  delay  is  computed  from  the  actual 

1  §171. 

-  First  Nat.  Bk.  v.  Harris,  108  Mass.  514  (four  days,  not  overdue); 
Ames?/-.  Merriam,98  Mass.  29-t  (ten  days,  not  overdue)  ;  Cowing??.  Altraan, 
71N.  Y.435  (27  Am.  Rep.  70)  (one  year,  fctale) ;  Davis  u.  Dayton,  27  N.  Y. 
S.  9G9;  7  iMisc.  488  (two  days,  not  overdue) ;  Skillmau  v.  Tilus,  3  Vroom. 
(31  N.  J.  L.)  9(i  (2^  years,  stale);  First  Nat.  Bk.  v.  Needham,  29  Iowa, 
249  (six  months,  stule)  ;  Ilimmelmnnu.  HotaIin<i,  40  Cal.  Ill  (6  Am.  Rep. 
000)  (one  day,  not  overdue);  E^IlS  v.  Loveriiig  Shoe  Co.,  59  Minn.  504; 
Gl  N.  W.G74  (several  days). 
470 


CH.  XVI.]  CHECKS.  §    177 

day  of  the  original  negotiation,  and  not  tVoni  the  given  date 
of  the  check. ^ 

§  176.  Effect  of  death  of  drawer. —  Although  there  is 
authority  for  the  proposjtiou  that  the  death  of  the  drawer 
of  a  check  revokes  the  authority  of  the  bank  to  honor  it,^ 
and  the  banks  very  generally  refuse  to  honor  ciiecks,  after 
they  have  learned  of  the  death  of  the  drawer;  3'et  it  seems 
that,  where  the  check  is  based  upon  a  valuable  considera- 
tion, there  is  really  no  snch  revocation,  and  the  holder  may 
enforce  the  contract  evidenced  by  it  as  if  the  drawer  were 
still  alive.  But  if  it  is  not  supported  by  a  valuable  con- 
sideration, the  death  of  the  drawer  works  a  complete 
revocation  of  the  check.''  In  those  States,  in  which  a 
checkholder  is  held  to  have  a  cause  of  action  against  a  bank 
on  an  uncertified  clieck,^  it  is  to  be  presumed  that  the  bank 
can  be  compelled  to  pay  the  check,  notwithstanding  the 
intermediate  death  of  the  drawer. 

§  177.   Right  of  the  checkholder  to  sue  the  bank. —  In 

a  previous  section^  it  has  been  explained  how  far  and 
under  what  circumstances  the  payee  of  an  unaccepted  bill 
of  exchange  may  sue  the  drawee,  on  the  theory  that  a  bill 
of  exchange  operates  as  an  assignment^jro  ianto  of  the  fund 
or  debt  against  which  the  bill  is  drawn.  The  same  ques- 
tion arises  in  respect  to  the  right  of  the  checkholder  to 
sue  the  bank  on  the  same  theory.  It  is  not  necessary  to 
restate  what  was  explained  in  the  preceding  section*^  in 
reference  to  bills  of  exchange,  and  that  section  and  this 
should  be  read  together.  In  respect  to  the  sufficiency 
of    the    theory  of    an    equitable    assignment    pro    taiito, 

J  Cowing  V.  Altnian,  71  N.  Y.  43()  (27  Am.  Rep.  70)  ;  GifCora  v.  HankU, 
88  Wis.  538  (GO  N.  W.  10G4). 

-  Morse  on  Bjnkiufj,  2G0. 

3  Cults  V.  Perkins,  12  Mass.  20G;  Debesser.  Napier,  1  McCord,  lOG  ( 10 
Am.  Dec.  608) ;  Burke  v.  Bi.sliop,  27  La.  Ann.  4G5  (21  Am.  Hep.  5G7).  See 
ante,  §  82,  as  to  the  iuvarulity  of  a  gift  cnusa  mortis  of  the  donor's  check. 

■•  As  to  which  see  post,  §  177. 

'  §5. 


'  §5. 


471 


§    177  CHECKS.  [CH.  XVI. 

there  is  a  material  difference  between  bills  of  exchange 
and  checks,  growing  out  of  the  implied  agreement 
of  the  bank  to  pay  the  checks  of  its  depositors  for  any 
amount,  large  or  small,  as  long  as  a  sufficient  balance  re- 
mains to  the  credit  of  the  depositor.  This  agreement  is 
almost  equivalent  to  an  acceptance  ;  and,  at  any  rate,  re- 
moves the  objection, —  which  is  raised  to  the  application  of 
the  theory  of  equitable  assignment  ^ro  tantoio  bills  of  ex- 
change, where  the  whole  of  the  fund  or  deposit  is  not 
called  for, —  that  the  creditor  is  making  a  new  bill  by  the 
drawing  of  the  check  for  a  smaller  amount,  without  the 
previous  consent  of  the  bank.  For  this  reason,  we  find 
a  few  of  the  courts  holding,  thiit  the  holder  of  a  check  may 
sue  the  bank  on  the  check  if  there  is  a  sufficient  balance  to 
the  credit  of  the  drawer,  as  long  as  it  has  not  been  counter- 
manded, as  fully  and  as  freely  as  he  may  sue  the  drawer ; 
on  the  theory  that  the  check  operates  as  an  assignment  ^?'o 
tanto  to  the  checkholder  of  the  deposit,  against  which  it 
is  drawn. ^  But  the  trend  of  judicial  opinion  is  iigainst  the 
acceptance  of  this  tlieory ;  and  it  may  now  be  received  as 
the  generally  accepted  American  doctrine;  that  a  check- 
holder  cannot  sue  the  bank  on  an  uncertified  check,  how- 
ever plethoric  the  condition  of  the  drawer's  deposit  might 
be.2 

1  Fogarties  v.  State  Bk.,  12  Rich.  L.  518  (78  Am.  Dec.  468);  Simmons 
Hardware  Co.  v.  Bk.  of  Greenwood,  41  S.  C.  177  (19  S.  E.  502);  Lester 
V.  Given,  8  Bush,  358;  Bank  of  Antigo  v.  Union  Tr.  Co.,  149  III.  343  (36 
N.  E.  1029);  Union  Nat.  Bk.  v.  Oceana  Co.  Bk.,  80  111.  212  (22  Am.  Rep. 
185);  Springfield  Marine  Bk.  v.  Mitchell,  48  111.  App.  486  (action  sus- 
stained,  where  there  was  no  deposit,  but  bank  had  agreed  to  honor 
check);  Roberts  v.  Corbiu,  26  Iowa,  315;  Snedden  v,  Harmes,  5  Colo. 
App.  477  (39  P.  C8). 

2  Bk.  of  the  Republic  v.  Millard,  10  Wall.  152;  Florence  Min.  Co.  v. 
Brown,  124  U.  S.  885;  Carr  v.  Nat.  Security  Bk.,  107  Mass.  45  (9  Am.  Rep. 
6);  Aetna  Nat.  Bk.  u.  Fourth  Nat.  Bk.,  46  N.  Y.  82  (7  Am.  Rep.  314); 
Atty.-General  v.  Cont.  L.  Ins.  Co.,  71  N.  Y.  325  (27  Am.  Rep.  55);  First 
Nat.  Bk.  V.  Shoemaker,  117  Pa.  St.  94  (11  A.  304),  Moses  v.  Franklin  Bk., 
34  Md.  581;  Purcell  v.  Alleraong,  22  Gratt.  742;  Commercial  N.  Bk.  v. 
First  Nat.  Bk.,  118  N.  C.  783  (24  S.  E.  524);  Mayer  v.  Chattahoochie  Nat. 
Bk.,  51  Ga.  325;  Simmons  v.  Ciucinnati  Sav.  Soc,  31  Ohio  St.  457  (27 
Am.  Rep.  521);  Harrison  v.  Wright,  100  lud.  515  (58  Am.  Rep.  805);  Case 

472 


CU.  XVI.]  CHECKS.  ILL.   CAS. 


ILLUSTRATIVE  CASES. 

Henrietta  Nat.  Bank  v.  State  Nat.  Bank,  80  Tex.  648  (16  S.  W.  321). 

Minotv.  Knss,  156  Mass.  458  (31  N.  E.  489). 

Mohawk  Bank  v.  Brodcrick,  10  Wend.  304. 

O'Brien  v.  Grant,  14(]  N.  Y.  163  (40  N.  E.  871). 

Bank  of  Antiago  v.  Union  Trust  Co.,  149  III.  343  (36  N.  E.  1029). 

Telegraphic  Promise  to  Pay  Clieck  Constitutes  a  Good 
Certification  or  Acceptance  and  Bank  is  Liable 
Tliereon. 

Henrietta  Nat.  Bank  v.  State  Nat.  Bank,  80  Tex.  648  (16  S.  W.  321). 

Gaines,  J.  This  suit  was  brought  by  the  appellee  to  recover 
of  the  Henrietta  National  Bank  and  Frank  Brown,  its  receiver, 
the  amount  of  a  check  drawn  upon  it  by  E.  F.  &  W.  S.  Ikard. 
On  the  22d  of  July,  1887,  E.  F.  &  W.  S.  Ikard  drew  a  check 
on  the  dtfendant  bank  in  fuvor  of  one  T.  F.  West  for  Si, 800. 
West  indorsed  and  delivered  it  to  one  Atkinson,  who  on  the  next 
day  presented  it  to  the  casljier  of  the  plaintiff  bank  at  Ft.  Worth, 
with  the  request  that  he  ca.sh  it.  The  cashier  immediately  tele- 
graphed the  defendant  bank  as  follows:  "  Will  you  pay  E.  F.  & 
W.  IS.  Ikard' s  check  for  eighteen  hundred  dollars  on  presenta- 
tion?" The  cashier  of  the  defendant  bank  on  the  same  day 
replied  by  telegram:  "Yes;  will  pay  the  Ikard  check."  U[)on 
the  receipt  of  this  telegram  the  plaintiff  discounted  the  paper, 
and  the  holder  transferred  it  to  the  bank  by  indorsement  and  de- 
livery. The  check  was  immediately  sent  by  mail  to  the  defend- 
ant bank,  with  a  request  to  remit  the  amount  to  the  plaintiff.  The 
letter  reached  Henrietta  on  Sunday,  and  on  Monday,  before 
banking  hours,  the  directors  of  the  defendant  bank  determined 
to  suspend  i)ayment,  and  thereafter  its  doors  were  not  opened  for 
regular  business.  The  court  having  given  judgment  for  the 
plaintiff  for  the  full  amount  of  the  check  and  interest,  and  the 
defendants  having  appealed,  they  now  complain  in  effect  that 
the  correspondence  by  telegraph  between  tlie  two  banks  did  not 
sufTiciently  describe  the  check,  so  as  to  make  the  promise  of  the 
defendant  bank  an  acceptance.  The  authority  mainly  relied  upon 
by  appellant's  counsel  in  support  of  their  contention  is  the  case 
of  Coolidge  V.  Paj'son,  2  Wheat.  66.  In  that  case  Chief  Justice 
Marshall  says:  "  Upon  a  review  of  the  cases  which  are  reported, 
this  court  is  of  the  opinion  that  a  letter  written  within  a  reasonable 
time  before  or  after  the  date  of  a  bill  of  exchange,  describing  it 
in  terms  not  to  be  mistaken,  and  promising  to  accept  it,  is,  if 
shown  to  the  person,  who  afterwards  takes  the  bill  on  the  credit 

V.  Henderson,  23  La.  Ann.  49  (8  Am.  Rep.  590) ;  Dickinson  v.  Coates,  79 
Mo.  251  (49  Am.  Rep,  228)  ;  Hopkinson  v.  Forster,  L.  R.  19  Eq.  74.  For 
a  fuller  statement  of  the  argument  in  favor  of  the  theory  of  equitable 
assignment  see  Tiedeman  Com.  Paper,  §  452. 

473 


ILL.   CAS.  CHECKS.  [CH.  XVI. 

of  the  letter,  a  virtual  acceptance,  binding  the  person  who  makes 
the  promise."  The  doctrine  was  reaffirmed  in  the  same  court  in 
the  cases  of  Schimmelpennich  v.  Bayard,  1  Pet.  284,  and  Boyce 
V.  Edwards,  4  Pet.  Ill,  and  has  been  frequently  followed  in  other 
courts.  Whether,  according  to  the  rule  laid  down,  the  corre- 
spondence should  show  any  more  than  the  amount  and  character 
of  tlie  bill  as  to  the  time  of  payment,  we  need  not  here  inquire, 
though  it  would  seem  that  such  a  description  ought  to  be  sufficient, 
according  to  the  most  rigid  rule  recognized  by  any  court.  The 
rule,  however,  applies  only  to  a  case  in  which  it  is  sought  to 
charge  the  defendant  as  the  acceptor  of  the  bill.  Cases  may  arise 
in  wiaich  the  party  who  has  promised  to  accept,  may  be  held  lia- 
ble upon  the  promise,  although  such  promise  may  not  be  deemed 
equivalent  to  a  formal  acceptance.  A  practical  difference  be- 
tween an  action  upon  an  acceptance  and  one  upon  a  promise 
to  accept,  is  that  the  former  may  be  brought  by  the  holder 
of  the  bill,  while  the  latter  suit  can  only  be  maintained  by 
the  party  to  whom  the  promise  is  made.  In  this  case  the 
promise  to  pay  the  bill  was  made  directly  to  the  plaintiff, 
and  it  was  upon  the  faith  of  that  promise  that  the  cheek  was  dis- 
counted. The  suit  is  not  brought  upon  an  alleged  acceptance. 
The  petition  states  the  facts  in  detail,  and  seeks  a  recovery  for 
the  breach  of  the  promise  to  pay  the  check.  In  Boyce  v. 
Edwards,  supra,  the  Supreme  Court  of  the  United  States  say : 
"  The  distinction  between  an  action  on  a  bill  as  an  accepted  bill 
and  one  founded  on  a  breach  of  promise  to  accept,  seems  not  to 
have  been  adverted  to.  But  the  evidence  to  support  one  or  the 
other  is  materially  different.  To  maintain  the  former,  as  has 
already  been  shown,  the  promise  must  be  applied  to  the  particu- 
lar bill  alleged  in  the  declaration  to  have  been  accepted.  In  the 
latter,  the  evidence  may  be  of  a  more  general  character,  and  the 
authority  to  draw  may  be  colkcted  from  circumstances,  and 
extended  to  all  bills  coming  fairly  wiihin  the  scope  of  the 
promise."  It  is  clear  that  the  promise  in  the  case  before  us  was 
sufficiently  definite  to  support  an  action  for  a  failure  or  a  refusal 
to  pay  the  check  described  in  the  petition,  if  not  sufficiently 
specific  to  authorize  its  being  treated  as  an  acceptance.  The 
check  offered  in  evidence  contained  the  character  and  figures 
"$1,800.00,"  but  in  the  body  a  line  appeared  to  have  been 
drawn  through  the  word  "  hundred."  If  the  word  was  intended 
to  be  erased,  it  was  a  check  for  $18  ;  if  not,  it  was  a  check  for 
81,800.  The  line  appears  to  have  been  drawn  along  the  top  of 
the  word,  rather  than  through  it,  and  it  is  not  at  all  clear  that, 
even  without  explanation,  it  should  be  held  to  be  an 
erasion.  The  member  of  the  firm  who  drew  the  check 
testified  that  it  was  intended  to  be  a  check  for  $1,800, 
and  that  he  thought  the  line  was  upon  the  blank  when  the  check 
was  written.  The  circumstances  attending  the  whole  transac- 
tion leave  no  doubt  that  the  purjose  was  to  draw  a  check  for  the 
amount  claimed  by  the  jjlaintiff,  and  that  the  line  was  either  upon 

474 


CH.  XVI.]  CHECKS.  ILL.   CAS. 

the  paper  when  the  cheek  was  drawn,  and  was  not  discovered,  or 
that  it  was  subsequently  placed  there  by  some  accident.  That  it 
was  competent  to  prove  that  a  mark  of  this  character  was  not  in- 
tended as  an  erasure,  especially  when  the  figures  in  the  margin 
tend  to  show  the  same  fact,  we  have  no  doubt.  Shars.  Starkie 
Ev.  500.  The  defendant  introduced  testimony  tending  to  show 
that  a  prudent  banker  would  not  have  paid  the  check,  at  least 
without  inquiry  as  to  llie  intention  of  the  drawers  in  executing  it. 
This  may  be  true,  but,  so  far  as  this  case  is  concerned,  it  is  a 
fact  of  no  importance.  It  was  nevertheless  the  duty  of  the  de- 
fendant bank  to  pay  the  check.  An  inquiry  would  have  shown 
beyond  doubt  that  il  was  a  check  for  $1,800;  and,  though  the 
apparent  erasure  may  have  justilied  a  delay  of  a  reasonable  time 
to  make  inquiry,  it  did  not  justify  a  final  refusal  to  pay.  We 
find  no  error  in  the  judgment,  and  it  is  aflSrmed. 


Drawer  Liable  on  Certified  Check  on  Failure  of  the 
Bank,  if  He  has  it  Certified  h<'fore  Delivery  to  Payee  — 
jS'ot  Liable  if  the  Payee  Procures  Certification. 

Minot  V.  Russ,  156  Mass.  458  (31  N.  E.  489). 

Field,  C.  J.  Tlic  first  case  is  an  appeal  from  a  judgment  ren- 
dered by  the  superior  court  for  the  dtfendant  on  his  demurrer  to 
the  declaration.  The  defendant  on  October  29,  1891,  drew  a 
check  on  the  Maverick  National  Bank  i)ayable  to  the  order  of  the 
plaintiff,  and,  being  informed  by  tlie  plaintiff  that  the  check  must 
be  certified  by  the  bank  before  it  would  be  received,  the  defend- 
ant on  the  same  day  presented  the  check  to  the  bank  for  cer- 
tification, and  the  bank  ceitifie<l  it  by  writing  on  tiie  face 
of  the  cheek  the  following:  "Maverick  National  Batik.  Pay 
only  throu<);h  clearing  house.  J.  W.  Work,  Cashier.  A.  C.  J., 
Paying  Teller."  After  it  was  certified  the  check  was,  on  Sat- 
urdaj'-,  October  31,  1891,  delivered  by  the  defendant  to  the 
plaintiff  for  a  valuable  consideration.  The  declaration  alleges 
that  the  bank  stopped  payment  on  Monday  morning,  No\cmber 
2,  1891,  "  before  the  commencement  of  business  hours  of  said 
day,"  and  that  on  that  da}^  payment  was  duly  demanded  of  the 
bank,  and  notice  of  nonpayment  was  duly  given  to  the  defendant. 
The  second  case  is  an  ai)peal  from  a  judgment  rendered  for  the 
defendants  by  tlie  superior  court  on  an  agreed  statement  of  facts. 
On  Saturday,  October  31,  1891,  the  defendants  drew  their  check 
on  the  Maverick  National  Bank,  payable  to  the  order  of  the 
plaintiffs,  and  delivered  it  to  them  in  pnyment  of  stocks  bought 
by  tlie  defendants  of  the  plaintiff.s.  The  check  was  received  too 
late  to  be  di^posited  by  the  i)laintiffs  for  collection  in  season  to 
be  carried  to  the  clearing  house  on  that  day,  but  during  banking 
hours  on  that  day  tlic  plaintiffs  i)resenled  tlie  check  to  the  Maver- 
ick National  Bai^k  for  certification,  and  the  bank  certified  it  by 
writing   or   stamping   on    its    face    the   following:     "Maverick 

475 


ILL,.   CAS.  CHECKS.  [cH.  XVI. 

National  Bank.     Certified.    Pay  only  through  clearing  house.    C. 

C.  Domett,  A.  Cashier.     ,  Paying  Teller."     At  that  time 

the  defendants  had  on  deposit  sufficient  funds  to  pay  the  check, 
and  the  bank,  on  certification,  charged  to  the  defendants'  account 
the  amount  of  the  check,  and  credited  it  to  a  ledger  account 
called  "  Certified  Checks,"  in  accordance  with  their  uniform 
custom.  After  certification,  the  plaintiffs  on  the  same  day  de- 
|)osited  the  check  in  the  Hamilton  National  Bank  for  collection. 
It  is  agreed  that  if  the  check  had  been  presented  for  payment  on 
Saturday  in  banking  hours  it  would  have  been  paid ;  but  the 
Maverick  National  Bank  transacted  no  business  after  Satuiday, 
and  on  Sunday  the  comptroller  of  the  currency  placed  a  National 
Bank  examiner  in  charge,  and  the  bank  was  put  into  the  hands 
of  a  receiver.  The  clearing  house  on  November  2d  refused  to 
receive  checks  on  the  Maverick  National  Bank,  and  the  check 
was  on  that  day  duly  presented  for  payment,  and  due  notice  of 
non-payment  was  given  to  the  defendants.  Each  of  the  checks 
was  in  the  ordinary  form  of  checks  on  a  bank,  and  they  were 
payable  on  demand,  and  no  presentment  for  acceptance  or  cer- 
tification was  necessary  to  charge  the  drawer.  In  a  sense,  un- 
doubtedly, a  check  is  a  species  of  bill  of  exchange,  and  in  a 
sense,  also,  it  is  a  distinct  commercial  instrument,  but  according 
to  the  general  understanding  of  merchants  and  according  to  our 
statutes  these  instruments  were  checks,  and  not  bills  of  ex- 
change. "A  check  is  an  order  to  pay  the  holder  a  sum  of 
money  at  the  bank  on  presentment  of  the  check  and  demand  of 
the  money.  No  previous  notice  is  necessary.  No  acceptance 
is  required  or  expected.  It  has  no  days  of  grace.  It  is 
payable  on  presentment,  and  not  before."  BuUard  v.  Ran- 
dall, 1  Gray,  603.  The  duty  of  the  bank  was  to  pay  these 
checks  when  they  were  presented  for  payment  if  the  drawers 
had  sufficient  funds  on  deposit.  The  bank  owed  no  duty  tn 
the  drawers  to  certify  the  checks,  although  it  could  certify  them, 
if  it  saw  fit,  at  the  request  of  either  the  drawers  or  of  the  holders 
and  if  it  certified  them  it  became  bound  directly  to  the  holders, 
or  to  the  persons  who  should  become  the  holders.  In  either  case 
the  bank  would  charge  to  the  account  of  the  drawer  the  amount 
of  the  check,  because  by  certification  it  had  become  absolutely 
liable  to  pay  the  check  when  presented.  When  a  check  payable 
to  another  person  than  the  drawer  is  presented  by  the  drawer  to 
the  bank  for  certification,  the  bank  knows  that  it  has  not  been 
negotiated,  and  that  it  is  not  presented  for  payment,  but  that  the 
drawer  wishes  the  obligation  of  the  bank  to  pay  it  to  the  holder 
when  it  is  negotiated,  in  addition  to  his  own  obligation.  But 
when  the  payee  or  holder  of  a  check  presents  it  for  certification 
the  bank  knows  that  this  is  done  for  the  convenience  or  security 
of  the  holder.  The  holder  could  demand  payment  if  he  chose, 
and  it  is  only  because  instead  of  payment  the  holder  desires  certi- 
fication that  the  bank  certifies  the  check  instead  of  paying  it.  In 
one  case  the  bank  certifies  the  check,  for  the  use  or  convenience 
476 


en.  XVI.]  CHECKS.  ILL.  CAS. 

of  the  drawer,  and  in  the  other  for  the  use  or  convenience 
of  the  holder.  In  tlie  present  cases  the  checks  were  seasonal)ly 
presented  to  the  bank  for  payment,  and  on  the  facts  stated  the 
the  defendants  would  he  liable  unless  the  certification  dis- 
charged them  from  liability.  It  is  argued  that  the  certifica- 
tion of  a  check,  whereby  the  bank  becomes  absolutely  lia- 
ble to  pay  it  at  any  time  on  demand,  discharges  the  drawer, 
because  it  is  said  that  the  check  then  becomes,  in  effect,  a  cer- 
tificate of  deposit;  and  it  is  also  argued  that  the  certification  is, 
ia  effect,  only  an  acceptance  of  a  bill  of  exchange,  and  that  if 
payment  is  duly  demanded  of  the  bank  and  refused,  and  notice 
of  nonpayment  duly  given,  the  drawer  is  held.  So  far  as  the 
question  has  been  considered,  it  has  been  decided  that  the  cer- 
tification of  a  bank  check  is  not  in  all  respects  like  the  making  of 
a  certificate  of  deposit  or  the  acceptance  of  a  bill  of  exchange, 
but  that  it  is  a  thing  sui  generis,  and  that  the  effect  of  it  depends 
upon  the  person  who,  in  his  own  behalf  or  for  his  own  benefit, 
induces  the  bank  to  certify  the  check.  The  weight  of  authority 
is  that  if  the  drawer,  in  his  own  behalf,  or  for  his  own  benefit 
gets  his  check  certified,  and  tlien  delivers  it  to  the  payee,  the 
drawer  is  not  discharged  ;  but  that  if  the  payee  or  holder  in 
his  own  behalf,  or  for  his  own  benefit,  gets  it  certified  instead 
of  getting  it  paid,  then  the  drawer  is  dischaiged  Born  v. 
Bank,  123  Ind.  78;  24  N.  E.  Rep.  173;  Brown  v.  Leckie,  43 
111.  497;  Rounds  u.  Smith,  42  111.  245;  Andrews  v.  Bank, 
9  Heisk.  211 ;  Bank  v.  Leach,  52  N.  Y.  350;  Boyd  v.  Nasmith, 
17  Ont.  40 ;  P^ssex  County  Nat.  Bank  v.  Bank  of  Montreal,  7 
Biss.  193  ;  Bank  v.  Whitman,  94  U.  S.  343,  345  ;  Bank  v.  Jones 
(111.  Sup.),  27  N.  E.  Rep.  5;53;  Bank  v.  Cornhauser,  37  111.  App. 
475  ;  Bank  V.  Miller,  77  Ala.  108  ;  Larsen  %\  Breene,  12  Colo.  480  ; 
21  Pac.  Rep.  498  ;  Bank  r.  Rotge,  28  La.  Ann.  933  ;  Morse  Banks, 
§§  414,  415.  We  are  of  oi)inion  that  this  view  of  the  law  rests  on 
sound  reasons.  If  it  be  true  that  the  existing  methods  of  doing 
business  mt>ke  the  use  of  certified  checks  necessary,  the  persons 
who  receive  them  can  always  require  them  to  be  certified  before 
delivery.  If  they  receive  them  uncertified,  and  then  present  them 
to  the  bank  for  certification  instead  of  paj^ment,  so  far  as  the 
drawer  is  concerned,  the  certification  should  be  considered  as 
payment.  It  may  also  be  said  that  in  the  second  case  the  certi- 
fication amounted  to  an  extension  of  the  time  of  payment  at  the 
request  of  the  payees  without  the  consent  of  the  drawers.  Before 
the  certification  the  drawers  could  have  requested  the  payees  to 
present  the  check  for  payment  on  Saturday,  or  could  themselves 
have  drawn  out  the  money  and  paid  the  check.  After  certifica- 
tion the  amount  of  the  check  no  longer  stood  to  the  credit  of  the 
drawers,  and  tlie  payees  had  Accepted  an  obligation  of  the  bank 
to  pay  only  through  tlie  clearing  house,  which  could  not  happen 
before  the  following  IMnnday.  Tlie  result  is  that  in  the  first  case 
the  judgment  is  reversed,  and  the  demurrer  overruled  ;  and  in  the 
second  case  the  judgment  is  allirmed.     So  ordered. 


ILL.  CAS.  CHECKS.  fCH.  XVI. 


Check  must  be  Presented  within  a  Reasonable  Time  — 
Now  Generally  held  Necessary  to  Present  or  Forward 
for  Presentment  within  Twenty-four  Hours. 

Mohawk  Back  v.  Broderick,  10  Wend.  304. 

This  was  an  action  of  assumpsit,  tried  at  the  Albany  Circuit  in 
March,  1831,  before  the  Hon.  James  Vauderpoel,  one  of  the  Cir- 
cuit Judges. 

The  phiintiffs  declared  as  the  indorsees  of  a  check  drawn  by 
John  Lc  Breton,  on  llie  Mechanics'  and  Farmers'  Bank  in  Albany, 
for  $86.18,  bearing  date  the  14lh  J.uuiary,  1830,  payable  to  the 
order  of  the  defendants,  and  by  tlKin  indorsed  to  the  plaintiffs. 
A  special  verdict  was  found,  from  which  the  following  facts  ap- 
peareJ:  The  check  was  drawn  previous  to  the  14th  January, 
post  dated,  and  delivered  to  the  defendants,  who  transferred  it, 
also  before  the  14th  January,  to  one  Myers,  and  indorsed 
their  names  upon  it  in  blank ;  on  the  14ih  January  Myers  depos- 
ited it  in  the  Mohawk  Bank  at  Schenectady,  where  it  w\is  received 
and  entered  to  his  credit  as  casli.  On  the  3d  February,  the 
Mohawk  Bank  sent  the  clieck  to  the  Comraerc'al  Bank,  in  Albany, 
in  exchange  as  cash,  which  bank  caused  the  check  to  be  pre- 
sented for  payment  to  the  Mechanics'  and  Farmers'  Bank  on  the 
6th  February,  when  payment  was  refused,  the  check  protested, 
and  notice  sent  to  the  defendants.  Neither  on  the  14th  Januarj', 
1830,  nor  at  any  time  afterward,  had  Le  Breton,  the  drawer  of 
the  check,  any  funds  in  the  Farmers'  and  Mechanics'  Bank  ; 
previous  to  that  day  he  had  overdrawn  his  account  $90,  which  was 
made  good  on  the  4lh  February.  At  the  date  of  the  check  Le 
Breton  was  a  merchant  in  Albany,  doing  business  and  conliouing 
in  business  until  tlie  1st  of  Fetiruary,  when  he  slopped  payment; 
during  all  the  month  of  January  he  was  insolvent  and  continued 
so  until  his  death  ;  none  of  his  debts  except  the  check  in  question 
were  due  until  he  stopped  payment.  The  average  time  in  which 
the  Mohawk  Bank  makes  its  exchanges  with  the  Albany  banks  is 
once  in  three  weeks  ;  from  the  14th  of  January  until  the  3d 
February,  no  packages  were  sent  by  the  Moliawk  Bank  to  the 
Albany  banks,  nor  were  any  exchanges  made  between  those  dates 
by  the  Mohawk  Bank  with  the  Albany  banks.  When  the  Moliawk 
Bank  holds  notes  payable  at  Albany,  they  are  sent  when  about 
to  fall  due  to  tlie  All)any  banks  for  collection,  although  the  usual 
time  for  making  exciianges  has  not  arrived  ;  but  between  tlie 
above  dates  no  notes  were  sent  to  Albany  by  the  Mohawk  Bank. 
A  daily  mail  passes  between  Schenectady  and  Albany. 

Savage,  C.  J.  Upon  the  facts  presented  by  the  special  ver- 
dict, the  plaintiffs  contend  that  no  demand  was  necessary,  as  the 
drawer  had  no  funds  in  the  hands  of  the  draweps,  and  was  insol- 
vent ;  and  if  a  demand  was  necessary  it  was  made  in  a  reasonable 
time.  The  defendants  insist  that  the  check  having  been  drawn 
and  negotiated  before  its  date,  it  was  payable  on  the  day  of  its 
478 


CH.  XVI.]  CHECKS.  ILL.  CAS. 

(late,  to  wit,  the  14th  January,  and  should  have  been  presented 
when  ])ayable,  and,  at  all  events,  that  it  was  not  presented  in  a 
reasonable  time. 

I  cannot  assent  to  tlie  proposition  of  the  plaintiffs,  that  no 
demand  was  necessary  in  this  case.  When  the  action  is  against 
the  drawer,  who  has  drawn  where  he  had  no  funds,  nor  any  rea- 
sonable exjieciatioii  that  his  draft  would  be  paid  by  the  drawee, 
be  cannot  ol»jcct  the  want  of  seasonable  demand  and  notice,  be- 
cause in  such  case  he  cannot  possihly  susiain  damage  from  the 
Want  of  presentment  of  the  bill ;  such,  however,  is  not  this  case. 
This  suit  is  brought  not  against  the  drawer,  but  indoi  sers.  The 
rule  on  this  sultject  is  well  laid  down  by  Mr.  Justice  Sutherland, 
in  Murray  r.  Judah,  6  Cowen,  490:  "  As  a  general  rule,  there- 
fore, a  check  is  not  due  from  the  drawer  until  payment  has  been 
demanded  from  the  drawee,  and  refused  by  him.  As  between 
the  holder  of  a  check  and  an  indorser  or  third  person,  payment 
must  be  demiudetl  within  a  reasonable  time.  But  as  between 
the  holder  and  maker  or  drawer,  a  demand  at  any  time  before 
suit  brought  is  sutficient,  unless  it  appear  that  the  drawee  has 
failed,  or  the  drawer  has  in  some  other  manner  sustained  injury 
by  the  delay."  Between  thesie  patties  a  demand  of  payment 
from  the  drawees  was  clearly  necessary.  Nor  can  I  assent  to 
the  proposition  of  the  defendant,  that  the  check  in  question  is  a 
bill  payable  on  the  14th  Januuy,  and  that,  therefore,  it  is  to  be 
governed  by  the  same  rules  as  l)ills  payable  on  a  particular  day. 
The  check  was  both  drawn  and  negotiated  before  its  date,  the 
effect  of  which  is  that  it  is  payable  on  demand,  on  or  after  the 
day  on  which  it  purports  to  bear  date,  and  nothing  more. 

The  only  serious  question  is  whetlier  the  clieck  was  presented 
in  reasonable  time.  In  the  Merchants'  Bank  v.  Spicer,  6  Wen- 
dell, 445,  Mr.  Justice  Marcysays:  "  Checks  are  considered  as 
having  the  character  of  inland  bills  of  exchange,  and  the  holder 
thereof,  if  he  would  prove  liis  right  to  resort  to  the  drawers  and 
indorsers,  must  use  the  sami  diligence  in  presenting  them  for 
payment  and  in  giving  notice  of  default  of  the  drawer  that  would 
be  required  of  him  as  ihe  holder  of  an  inland  bill."  With  regard 
to  inland  bills  of  exchange  and  promissory  notes  payable  on 
demand,  the  only  rule  as  to  when  payment  must  be  demanded  is 
that  it  must  be  done  within  a  reasonable  time.  What  shall  be 
deemed  a  reasonable  time  must  in  some  measure  depend  on  the 
circumstances  of  each  particular  case.  In  this  court,  whether 
the  presentment  is  made  within  a  reasonable  time,  is  held  to  l)e  a 
question  of  law,  where  there  is  no  dis|)ute  about  facts  ;  in  some 
other  courts  it  is  held  to  be  a  question  for  the  jury.  It  is  sin- 
gular that  so  little  is  to  be  found  in  the  books  upon  the  question, 
What  time  is  reasonable?  As  to  bills  and  i)romissory  notes,  we 
have  in  our  own  court  some  cases.  In  Aymar  v.  Beers,  7 
Cowen,  711,  Mr.  Justice  Woodworth  has  reviewed  the  cases, 
from  which  it  appears  that  no  precise  time  has  been  determined 
upon   as  a  reasonable  lime.      In  that  case  the  bill  was  drawn  in 

47i» 


ILL.  CAS.  CHECKS.  [CH.  XVI. 

New  York  upon  a  house  in  Richmond,  Virginia,  at  three  days' 
sight ;  it  was  presented  in  twenty-nine  days,  and  held  to  be  in 
time,  in  consequence  of  peculiar  circumstances.  In  Robinson  v. 
Ames,  20  Johns.  R.  146,  seventy-five  days  had  elapsed,  and  it 
was  held  that  there  was  no  laches ;  in  that  case  the  bill  had  been 
negotiated.  In  both  these  cases  the  action  was  against  the 
drawer. 

Although  it  has  been  often  said  that  checks  are  like  inland 
bills  of  exchange,  and  are  to  be  governed  by  the  same  principles, 
yet  I  apprehend  greater  diligence  has  been  required  in  present- 
ing checks  than  ever  has  been  required  in  presenting  bills  of 
exchange.  In  Mechanics'  Bank  v.  Spicer,  before  cited,  it  was 
held  that  it  was  not  indispensable  that  a  clieck  should  be  pre- 
sented on  the  same  day  it  was  drawn,  where  the  parties  all 
resided  in  the  same  city.  Mr.  Chitty,  in  his  treatise  on  bills, 
has  collected  many  of  the  cases  on  this  point,  p.  345  to  353, 
Phil.  ed.  of  1821.  When  this  question  has  been  decided  by 
juries  no  uniform  rule  could  prevail ;  in  some,  three  or  four  or 
five  days  were  deemed  not  too  long,  and  in  others  it  was  held 
that  the  demand  should  be  on  the  same  day.  But  the  more 
recent  rule  seems  to  be  that  a  check  given  and  payable  in  London 
in  the  morning  must  be  presented  the  next  morning,  or,  at 
farthest,  during  the  banking  hours  of  the  next  day  ;  if  it  be  pay- 
able at  a  place  different  from  where  it  was  drawn,  it  should  be 
sent  by  the  mail  of  the  next  day.  In  the  case  of  Beeching  v. 
Gower,  1  Holt,  313,  the  plaintiffs  were  bankers  at  Turnbridge. 
On  the  5th  March,  1816,  they  received  from  the  defendant  a 
note  of  the  Kentish  Bank,  pa3'able  at  Maidstone  and  at  London. 
They  sent  it  to  London  on  the  evening  of  the  5th ;  on  the  6th  it 
was  presented,  but  the  house  had  failed ;  it  was  returned  to  the 
plaintiffs  on  the  7th,  and  notice  given  to  the  defendant.  The 
Maidstone  Bank  paid  on  the  6th,  but  stopped  payment  on  the 
7th.  Maidenstone  is  fourteen  miles  from  Turnbridge ;  London 
is  more  than  twice  the  distance.  In  this  action  the  plaintiffs 
recovered.  In  another  case  between  the  same  parties,  the 
defendants  paid  the  plaintiffs  a  check  on  the  Maidstone 
Bank  on  the  5th  April.  The  plaintiffs  kept  it  the  5th 
and  6th,  and  sent  it  to  Maidstone  on  the  7th  but  the  bank 
did  not  open  that  morning.  Had  it  been  sent  on  the  5th  or  6th 
it  seems  it  would  have  been  paid.  Gibbs,  C.  J.,  nonsuited  the 
plaintiffs,  saying:  "The  plaintiffs  cannot  recover;  they  have 
been  guilty  of  laches.  I  will  not  say  that  it  was  their  duty  to 
have  sent  the  checkoff  by  the  post  of  the  5th;  but  the  extreme 
time  up  to  which  they  were  justified  in  keeping  it,  was  till  the 
post  of  the  6th.  They  did  not  send  it  till  the  7th.  It  does  not 
matter  when  the  carrier  arrived ;  they  must  suffer  for  their  negli- 
gence." In  Richford  v.  Ridge,  2  Campb.  537,  Lord  Ellen- 
borough  says:  "  It  seems  convenient  that  a  check  received  in  the 
course  of  one  day  should  be  presented  the  next,  and  that  the 
holder  must  present  it  with  due  diligence  to  the  bankers  on 
480 


Ctt.  XVI.]  CHECKS.  ILL.   CAS. 

whom  it  was  drawn,  and  give  notice  of  its  dishonor  to  those 
against  whom  he  seeks  a  reraed3\  In  that  case  it  appeared  tliat 
the  plaintiffs  were  bankers  at  Aylesbury.  On  the  13th  June 
they  cashed  for  the  defendant  a  check  drawn  by  a 
house  in  Smithfield  upon  a  house  in  the  city  of  Lon- 
don. The  plaintiffs  mio^ht  have  sent  the  check  on  the  same 
day,  but  they  did  not  till  the  next,  the  14th ;  their  agents  pre- 
sented it  on  the  15ih,  when  it  was  dishonored,  and  notice  was 
given  on  the  IGth.  The  plaintiffs  had  a  verdict.  Tiiese  were 
nisiprius  cases,  l)ut  the  cause  of  Robson  v.  Bennet,  2  Taunt.  389, 
was  argued  and  considered  by  tlie  court.  MansOeld,  C.  J., 
cites  the  case  of  Appleton  v.  Sweetapple,  as  deciding  that  a  check 
need  not  be  presented  on  tlie  day  on  which  it  is  drawn.  In  Cor- 
nell V.  Lovett,  1  Hall,  G8,  Mr.  Justice  Oakley  says  the  rule 
appears  to  be  settled  that  no  laches  can  be  imputed  to  the  holder 
if  the  check  is  presented  at  any  time  during  the  day  after  that  on 
which  it  was  given.  The  true  rule  undoubtedly  is,  that  a  check, 
to  charge  an  indorser,  must  be  presented  with  all  the  dispatch 
and  diligence  which  is  consistent  with  the  transaction  of  other 
commercial  concerns. 

The  plaintiffs  received  this  check  on  the  14th  January.  They 
were  in  the  habit  of  sending  notes  at  other  times  than  their 
regular  periods  of  exchanging,  according  to  the  time  of  their  fall- 
ing due ;  there  was  nothing  in  the  nature  of  their  business, 
therefore,  which  prevented  an  earlier  presentment  of  the  check 
in  question.  According  to  the  cases  above  referred  to,  the 
check  should  have  been  sent  on  the  loth ;  it  would  then 
have  been  presented  on  the  IGth.  Had  notice  of  its  dishonor 
been  then  given,  the  court  cannot  say  tiiat  the  defendants  might 
not  have  secured  themselves,  as  tlie  drawer  was  doing  business 
for  two  weeks  after  that  time  before  he  stopped  payment.  I  am 
of  opinion  the  defendants  are  entitle  to  judgment. 


Payment  of  Checks  Through  Clearing^-House  —  Effect 
of  Contract  for  Clearance  on  Obliyratiou  to  Honor 
Checks    on  Insolvent  Bank. 

O'Brien  v.  Grant,  HG  N.  Y.  1G3  (40  N.  E.  871J. 

Appeal  from  supi-eme  court,  general  term,  First  department. 

Action  by  Miles  M.  O'Brien  and  another,  receivers  of  the 
Madison  Square  Bank,  against  Hugh  J.  Grant,  receiver  of  the 
Saint  Nicholas  Bank,  to  recover  certain  securities.  From  a 
judgment  of  the  general  term  (32  N.  Y.  Supp.  41)8)  affirming  a 
judgment  dismissing  the  complaint,  plaintiff  appeals.     Aflirmed. 

This  action  was  brought  to  recover  from  the  defendant  certain 
securities  which  had  been  deposited  by  the  Madison  Square  Bank 
with  the  St.  Nicholas  Bank,  and  the  proceeds  of  the  securities, 
which  the  latter  bank  had  converted  into  money.     The  following 

yi  481 


ILL.  CAS.  CHECKS.  [CH.  XVI. 

facts  were  found,  and  are  either  undisputed  or  proved  :  In  Jan- 
uary, 1891,  an  arrangement  was  made  between  the  Madison 
Square  Bank  and  the  St.  Nicholas  Banlc  (both  of  them  being  State 
banks)  by  which  the  latter  bank,  which  was  a  member  of  the  New 
York  Clearing-House  Association,  became  the  agent  to  clear, 
through  the  clearing  house,  checks  drawn  upon  the  Madison 
Square  Bank.  The  St.  Nicholas  Bank  submitted  in  writing  a 
memorandum  of  the  conditions  on  which  it  would  undertake  this 
business  for  the  Madison  Square  Bank,  as  follows:  "  $50,000  bal- 
ance to  be  kept  at  all  times,  to  be  free  from  interest.  An  allow- 
ance at  the  rate  of  2  per  cent  per  annum  shall  be  allowed  on 
average  exceeding  this  amount.  Tiie  Madison  Square  Bank  is  to 
keep  with  this  bank  $100,000  in  approved  bills  receivable."  In 
a  letter  dated  January  9,  1891,  addressed  by  the  Madison 
Square  Bank  to  the  St.  Nicholas  Bank,  the  cashier  of  the 
Madison  Square  Bank  says:  "Referring  to  conversation  of  our 
president  with  your  good  selves,  we  would  say  that  we  accept 
the  terms  and  conditions  on  which  your  bank  agrees  to  clear  for 
us  as  per  your  memorandum,  namely  $50,000  balance  to  be  kept 
with  you  at  all  times,  free  of  interest.  Interest  at  2  per  cent  per 
annum  to  be  allowed  us  on  average  exceeding  that  amount.  This 
bank  to  keep  with  you  $100,000  of  approved  bills  receivable. 
*  *  *  We  inclose  copy  of  a  letter  addressed  by  us  to  the 
clearing-house  committee  to  conform  with  the  requirements  of 
their  circular  of  December  18th,  last."  The  letter  to  tlie  clear- 
ing-house committee  inclosed  a  copy  of  a  resolution  signifying 
the  acquiescence  of  the  Madison  Square  Bank  with  the  terms  of 
the  circular,  and  authorizing  its  cashier  to  send  a  check  for  the 
annual  payment  of  $200  required  of  banks  clearing  through  mem- 
bers. It  was  verbally  agreed  between  the  parties,  at  the  time  of 
the  arrangement  referred  to  in  said  letter  of  the  9th  of  January, 
that  other  securities,  of  equal  value,  might  be  substituted  from 
time  to  time  for  those  first  deposited,  making  up  the  $100,000  of 
bills  receivable.  The  Clearing-House  Association  was  and  is  a 
voluntary  association  of  banks  and  banking  associations  of  the 
city  of  New  Yoi-k.  The  object  of  the  association,  as  stated  in 
its  constitution,  is  "  tlie  effecting  at  one  place  of  the  daily  ex- 
changes between  the  several  associate  banks,  and  the  payment  at 
the  same  place  of  balances  resulting  from  such  exchanges." 
The  St.  Nicholas  Bank  was  a  member  of  the  association.  The 
Madison  Square  Bank  was  not  so.  Section  25  of  the  constitution 
was  as  follows:  "Whenever  exchanges  shall  have  been  made 
at  the  clearing-house,  by  previous  arrangements  between  members 
of  the  association,  through  one  of  their  number  and  banks  in  the 
city  and  vicinity  who  are  not  members,  the  receiving  bank  at  the 
clearing  bouse  shall  in  no  case  discontinue  the  arrangement  with- 
out giving  previous  notice,  which  notice  shall  not  take  effect  until 
the  exchanges  of  the  morning  following  the  receipt  of  such  notice 
shall  have  been  completed."  This  section  was  in  force  at  and 
before  January  9,  1891,  and  is  still  in  force,  and  it  was  known  to 

482 


CH.  XVI.]  CHECKS.  ILL.   CAS. 

be  so  by  the  Madison  Square  Bank  at  the  time  of  the  making  of 
this  arrangement.  After  the  m:ikiag  of  this  arrangement,  and  on 
and  after  the  13th  January,  1891,  the  St.  Nicholas  Bank  made  the 
clearances  at  the  clearing  hoube  for  the  Madison  Square  Bank  up 
to  and  including  the  8th  day  of  August,  1893;  and  the  Madison 
Square  Bank  deposited  and  kept  good,  as  to  amount  and  value, 
its  deposit  of  bills  receivable  with  the  St.  Nicholas  Bank,  and  up  to 
some  time  in  July,  1893,  kept  good  its  money  balance  of  $50,000  in 
addition  thereto.  Some  time  prior  to  August  8,  1893,  the  St. 
Nicholas  Bank  desired  to  terminate  the  arrangement  for  making 
clearances  for  the  Mailison  Square  Bunk.  At  that  date  it  held, 
also,  certain  coUaterul  securities,  taken  upon  loans  made  upon  notes 
of  the  Madison  Square  Bank,  and  by  atrreement  they  or  their  pro- 
ceeds should  be  applied  to  any  other  ol)ligation3  of  that  bank.  On 
the  8th  day  of  August,  1893,  the  St.  Nicholas  Bank  gave  the  notice 
required  by  the  twenty-fifth  rule,  —  that  it  would  cease  to  make 
clearances  for  the  Madison  Square  Bank.  This  was  seived  upon 
the  banks  constituting  tlie  Clearing  House  Association  on  that 
day.  By  the  terms  of  section  25  this  notice  took  effect  upon  the 
completion  of  the  exchanges  at  the  clearing  house  on  the  9th  of 
August.  These  clearances  were  made  every  day  immediately 
after  10  o'clock,  and  were  completed  before  12  o'clock.  The  St. 
Nicholas  Bank  paid  on  the  9lh  of  August,  through  the  clearing 
house,  checks  drawn  ui)on  the  Madison  Square  Bank  by  depos- 
itors having  amounts  to  meet  the  same  to  their  credit  as  depositors 
on  the  books  of  tlie  Madison  Square  Bank,  $372,000.  On  the  8th 
day  of  August,  1893,  the  Madison  Square  Biink,  after  ineffectual 
efforts  to  obtain  a  loan  to  relieve  its  immediate  necessities,  was 
visited  by  the  clearing-house  committee  and  its  condition  exam- 
ined ;  also  by  an  officer  of  the  State  bank  dej)artment.  After  this 
examination  by  the  committee  of  the  clearing  house,  their  conclu- 
sion that  the  bank  was  not  in  a  condition  to  continue  business  was 
communicated  to  the  officers  and  some  of  the  directors  of  the  Mad- 
ison Square  Bank.  The  Madison  Square  Bank  di(i  not  0[)en  for 
business  on  the  following  day.  It  was,  in  fact,  insolvent  on  the  8th 
of  August,  1893;  and  the  officers  of  tlie  St.  Nicholas  Bank  knew 
before  the  exchanges  were  made  on  the  9th  of  Au>rust,  that  the 
Madison  Square  Bank  was  insolvent,  or  that  its  insolvency  was  im- 
minent, and  that  it  had  stopped  business.  Included  in  the  gross 
sura  of  $372,000,  the  amount  of  the  checks  upon  the  Madison 
Square  Bank  cleared  by  the  St.  Nicholas  Bank  on  the  9lh  of 
August,  were  two  cheeks  drawn  by  Elliott  Danforth,  the  treas- 
urer of  the  State  of  New  York,  against  funds  of  the  State  depos- 
ited in  the  said  bank,  which  cheeks  were  signed  and  dated  on  the 
8lh  day  of  August,  1893,  anci  were  dei)()sited  in  banks  in  the  city 
of  New  York  which  were  members  of  the  Clearing-IIouse  Associ- 
ation, before  10  o'clock  on  the  morning  of  the  9th  of  August, 
1893,  and  were  by  such  banks  sent  to  the  clearing  house  on  said 
9th  day  of  August.  The  clearance  of  said  checks  was  regular, 
and  according  to  the  usual  course  of   business  among  the  banks 

483 


ILL.   CAS.  CHECKS.  [CH.  XVI. 

constituting  said  Clearing-House  Association,  notwithstanding 
the  fact  that  they  were  not  deposited  for  collection  with  a  clear- 
ing-house bank  until  tlie  morning  of  the  9th  day  of  August,  1893. 
The  St.  Nicholas  Bank  had  no  knowledge  on  the  9th  day  of  August, 
1893,  of  any  irregularity  in  regard  to  the  drawing,  deposit,  or 
transmission  to  the  clearing  house  of  any  of  the  checks  going  to 
make  up  said  gross  amount  of  $372,000.  The  referee  found  that 
the  payments  of  checks  on  tlie  morning  of  August  9,  1893,  were 
in  the  performance  of  its  contract  with  the  Madison  Square  Bank, 
and  "were  not  made  with  the  intent  on  the  part  of  either  of  the 
banks  to  give  a  preference  to  any  creditor  of  the  Madison  Square 
Bank  over  any  other  creditor,  or  in  violation  of  the  corporation 
law  of  the  Slate,  and  he  held  that  the  plaintiffs  were  not  entitled 
to  recover  any  part  of  the  money  or  securities  held  by  the  St. 
Nicholas  Bank.  From  the  affiraiance  of  the  judgment  entered 
upon  his  report,  at  the  general  term,  the  plaintiffs  have  appealed 
to  this  court. 

Louis  Marshall,  for  appellants.  William  Allen  Butler,  for 
respondent. 

Gray,  J.  (after  stating  the  facts).  The  St.  Nicholas  Bank 
claims  tlie  right  to  apply  the  securities  and  moneys  theretofore 
deposited  with  it  by  the  Madison  Square  Bank  towards  the 
reimbursement  of  its  payment  or  clearances  of  the  morning  of 
August  9,  1893.  With  respect  to  that  claim  tlie  proposition  of 
the  plaintiffs  is  twofold :  They  say  that  rule  25  of  the  clearing 
house  did  not  require  the  St.  Nicholas  Bank  to  clear  the 
checks  drawn  on  the  Madison  Square  Bank,  presented  after 
it  became  aware  of  the  insolvency  of  the  latter,  and  that  such 
insolvency  terminated  the  relation  of  clearing-house  agents,  and 
rendered  any  payments  made  unauthorized;  or,  if  the  clearing- 
house rule  is  susceptible  of  the  interpretation  that  it  required  the 
St.  Nicholas  Bank  to  honor  checks  drawn  on  the  Madison  Square 
Bank  after  its  insolvency  became  known  to  it,  the  contract  between 
the  banks,  in  so  far  as  it  contemplated  such  payment,  and  the  use  of 
the  securities  of  the  Madison  Square  Bank  to  secure  the  advances 
made  by  the  St,  Nicholas  Bank,  was  an  illegal  preference,  under 
the  statute.  The  controversy  must  turn,  in  my  opinion,  upon 
the  nature  of  the  relation  which  existed  between  the  two  banks 
in  question  and  the  clearing  house,  and  upon  what  was  the  extent 
of  the  obligation  entailed  upon  the  St.  Nicholas  Bank,  in  engag- 
ing to  receive  and  to  clear  checks  drawn  upon  the  Madison 
Square  Bank,  when  presented  at  the  clearing  house.  For  the 
plaintiffs  it  is  argued  that,  as  between  the  Madison  Square  Bank 
and  the  St.  Nicholas  Bank,  the  relation,  simply,  of  principal  and 
agent  was  created,  and  therefore,  unon  the  insolvency  of  the 
former  becoming  known,  on  the  morning  of  the  day  when  clear- 
ances of  the  previous  day's  checks  were  to  be  effected,  that  the 
latter  bank  was  not  entitled  to  pay  checks  drawn  upon  the  former 
bank.  But  I  think  to  view  the  relation  as  such  is  altogether 
incorrect,    and   unwarranted   by   the    facts.     In   a   certain   and 

484: 


err.  XVI.]  CHECKS.  ill.  cas. 

limited  sense,  the  St.  Nicholas  Bank,  of  course,  would  act 
as  an  agent,  in  clearing  and  paying  checks  drawn  upon 
the  Madison  Square  Bank.  That,  however,  was  a  mere  feature 
of  that  larger  contractual  relation  into  wliich  the  two  banks 
had  entered  with  the  Clearing-House  Association,  and  wliith 
characterized  all  their  dealings.  The  agreement  of  January, 
1891,  was  one  to  which  there  were  three  parties,  eacii  of 
which  was  moved  to  enter  into  it  by  a  legitimate  consideration. 
The  Madison  Square  Bank  accjuired  tlie  very  substantial  advan- 
tages which  tlie  members  of  tlie  Ciearing-House  Association  en- 
joyed, in  the  increased  convenience,  dispatch,  and  safety  of 
banking  transactions.  The  St.  Nicholas  Bank  acquired  the 
advantage,  benefit,  and  a  protection  )>y  the  deposit  of  collateral 
securities  to  the  amount  of  $100,000,  and  of  the  cash,  required 
to  be  made  by  the  Madison  Square  Bank.  The  cash  deposit  was 
to  be  free  of  interest,  and  maintained  at  a  da  ly  balance  of  $50,- 
000.  The  members  of  the  Ciearing-IIouse  Association,  in  extend- 
ing to  the  Madison  Square  Bank  the  riglit  to  have  its  checks 
cleared  and  paid  through  one  of  its  members,  were  assured  that 
all  checks  presented  would  be  paid  up  to,  and  including,  the  day 
following  the  giving  of  the  notice  by  the  St.  Nicholas  Bank  of  the 
termination  of  the  arrangement  between  itself  and  the  Madison 
Square  Bank.  The  learned  referee  veiy  correctl}^  defines  the 
arrangement  between  tliese  two  banks  and  tiie  clcaiing  house  as 
constituting  a  tri[)artite  agreement,  upon  ample  consideration, 
for  the  mutual  benefit  of  all  the  parties  who  entered  into 
it.  That  agreement  jjrovided  for  the  length  of  its  duration, 
for  the  maintenance  at  all  times  of  the  stipulated  security 
to  protect  the  St.  Nicholas  Bank,  and  bound  that  bank  to 
receive  and  pay  the  checks  drawn  upon  the  Madison  Scpiare 
Bank  as  it  would  its  own.  The  St.  Nicholas  Bank  could 
only  agree  and  arrange  to  clear  for  th.e  Madison  Square  Bank 
in  accordance  with  conditions  imi)osed  by  the  constitution 
and  rules  of  the  Clearing-IIouse  Association ;  and  an  essential 
condition  was  that  the  arrangement  could  not  be  discontinued, 
nor  should  its  liaf)ility  cease,  until  after  the  completion  of  the 
exchanges  of  the  morning  next  following  the  receii)t  of  a  notice 
of  discoiUinuance.  There  was  nothing  in  such  a  provision  of  the 
constitution  of  the  clearing-house  which  was  objectionable,  legady 
speaking  or  otherwise.  It  was  perfectly  com[)etent  for  the  banks 
to  form  themselves  into  this  voluntar}'  association,  and  to  agree 
that  they  should  be  governed  by  a  constitution  and  by  rules. 
When  adopted,  they  expressed  the  contract  by  which  such  mem- 
ber was  bound,  and  which  measured  its  riiihts,  duties,  and  lia- 
bilities. Belton  V.  Hatch,  109  N.  Y.  503;  17  N.  E.  225.  If  not 
in  conflict  with  rules  of  law,  they  must  bo  awarded  that  effect 
which  is  always  accordcMl  t )  the  deliberate  engagements  of  parties. 
The  provisions  of  section  2.")  of  the  constitution  of  the  Clearing- 
IIouse  Association  were  designed  as  a  security  and  a  protoctioa 
for  the  members,  in  the  event  mentioned.     When  the  Madison 

485 


ILL.   CAS.  CHECKS.  [CH.  XVI. 

Square  Bank  made  its  arrangement  with  the  St.  Nicholas  Bank, 
and  also  made  compliance  with  the  terms  of  tlie  demand 
of  the  clearing-house  circular,  I  think  it  is  clear  that  a  definite  con- 
tractual relation  was  at  once  created  between  the  three  parties, 
whose  provisions  and  relative  engagements  were  effectually 
defined  in  and  controlled  by  the  constitution  and  rules  of  the 
clearing  house,  in  so  far  as  tliey  touched  the  proposed  clearances 
of  checks.  The  contract  which  bound  the  members  of  this  vol- 
untary associations  of  banks,  and  regulated  their  duties,  rights, 
and  liabilities,  perraiited  the  repi'esentation  of  an  outside  bank 
through  a  member,  provided  that  member  assumed  a  liability 
which  should  not  cease  until  the  completion  of  clearances  on  the 
morning  next  after  its  notice  of  a  discontinuance  was  given. 
That  liability  so  exactly  provided  for  is,  however,  sought  to  be 
limited  to  cases  where  insolvency  has  not  supervened,  as  to  the 
non-member  bank.  If  the  relation  here  was  strictly  that  of  an 
agent  acting  for  a  principal,  the  question  might  be  a  serious  one ; 
but  even  then  much  might  be  said  in  favor  of  the  liability  which 
the  agent  had,  with  the  consent  of  the  principal,  assumed.  That, 
however,  was  not  the  relation.  The  Madison  Square  Bank  was 
a  contracting  party  in  an  agreement  to  which  tlie  other  parties 
were  the  Si.  Nicholas  Bank  and  the  Clearing-House  Association, 
and  it  had  accepted,  and  had  become  bound  by,  provisions  in 
the  latter' s  constitution  and  rules.  That  agreement  was  entered 
into  at  a  time  when  it  was  perfectly  competent  to  make  it,  and  its 
duration  was  fixed  by  section  25  of  the  constitution  of  the  clearing 
house.  As  tlie  res|)ondent's  counsel  says,  every  bank  entitled 
to  the  payment  of  checks  sent  by  it  through  the  exchanges  of  the 
clearing  house,  in  due  course,  had  aright  to  rely  upon  the  liability 
of  any  other  bank  clearing  for  a  nonmember,  and  unless  this 
liability  continued  definitely,  and  up  to  a  certain  period,  the 
liability  of  the  clearing  bank  would  not  be  fixed  and  enforceable. 
Here  the  effect  of  the  constitution  and  rules  of  the  clearing  house 
upon  the  agreement  was  as  though  it  had  been  stated,  in  so  many 
words,  that  it  should  commence  upon  January  13,  1891,  and 
should  be  at  an  end  on  August  9,  1893,  after  the  clearances  of 
that  day  had  been  completed.  What  was  there  in  the  agreement 
and  its  incidents  which  contravened  any  rule  of  law  or  of  policy? 
The  plaintiffs  say  that  the  effect  is  to  give  an  illegal  preference, 
under  the  statute,  which,  it  is  meant,  would  be  accomplished  by 
the  payment  of  checks  after  the  insolvency  of  the  nonmember 
bank  is  known,  and  by  the  use  by  the  clearing  bank  of  the 
deposited  securities  in  reimbursement  thereof.  To  that  I  cannot 
agree.  The  statute  referred  to  is  the  State  corporation  law 
(chapter  688,  Laws  1892),  which,  in  section  48,  contains  previ- 
ously existing  provisions  of  the  banking  law  of  this  State.  The 
provisions  of  the  section  forbid  the  assignment  or  transfer 
of  any  property  "  when  the  corporation  is  insolvent,  or 
its  insolvency  is  imminent,  with  the  intent  of  giving  a 
preference   to   any   particular   creditor   over  other  creditors  of 

486 


CH.  XVr.]  CHKCKS.  ILL.  CAS. 

the  corporation."  This  provision  has  no  application  to  such  a 
case  as  tliis,  where,  at  the  time  wlien  the  arrangement  was  made 
with  the  St.  Nicholas  Bank,  the  Madison  Square  Bank  was  sol- 
vent. It  would  be  absurd  to  speak  of  the  agreement  of  January', 
1891,  as  having  been  made  in  contemplation  of  future  insolvency, 
or  with  the  intent  to  give  a  preference  to  any  creditor  of  the 
Madison  Square  Bank.  If  there  is  any  presumi)tion  respecting 
the  business  engagements  of  going  concerns,  it  is  that  they  will 
be  fulfilled  ;  and  when  securit}'^  is  exacted,  it  is  a  business  precau- 
tion, to  compel  exact  and  prompt  performance,  rather  than  a 
provision  in  contemplation  of  insolvency.  If  it  were  otherwise, 
business  transaeti(jns  which  have  for  their  subject  the  accommo- 
dation of  one  corporation  by  anoiher  in  the  loan  of  money,  or 
the  extension  of  credit,  would  be  seriously  embarrassed,  if  not 
checked.  The  statute  recognizes  the  right  of  a  banking  corpora- 
tion to  transfer  promissory  notes  or  evidences  of  dt'l)t,  received 
in  the  transaction  of  its  ordinary  business,  to  purchasers  for  a 
valuable  consideration  ;  and  it  may  lawiu  ly  do  so  in  pledge  to 
secure  its  creditor,  wlien  it  is  in  a  condition  of  solvency.  The 
deposit  of  securities  made  by  the  Madison  Square  Bank  with  the 
St.  Nicholas  Bank  constituteci  a  lawful  pledge  of  its  assets  to  pro- 
tect the  former  against  any  possible  loss  in  undertaking  to  clear 
and  pay  all  checks  drawn  ui)on  the  latter,  and  sent  through  the 
clearing  house.  The  invalidity  of  a  transfer  or  assignment  of 
property  by  a  banking  corporation,  under  the  banking  law,  is 
where  it  has  been  matle  while  in  a  condition  of  insolvcncv,  or  in 
contemplation  of  it,  and  with  the  "  intent"  of  giving  a  preference. 
The  "intent"  must  exist,  and  be  inferable,  to  vitiate  the 
transaction.  In  this  connection  our  recent  decision  in  Bank  v. 
Davis,  143  N.  Y.  51)0 ;  37  N.  E.  616,  may  be  referred  to,  where 
the  question  involved  was  whether  the  preference  given  to  savings 
bank  deposits  by  the  State  banking  law  was  in  contravention  of 
the  United  States  national  banking  law,  which  avoids  transfers  or 
assignments  or  deposits  made  with  a  view  to  prefer  a  creditor. 
It  was  there  said  —  and  the  observation  is  applicable  here  —that 
"  it  is  the  voluntary  act  of  the  national  bank,  in  contemplation  of 
its  insolvency,  and  with  the  view  of  then  preventing  tiie  ratable 
application  of  its  property,  which  is  avoided  b}'  the  natiijnal  law. 
In  the  present  case,  while  a  going  concern,  it  entered  into  an 
engagement  with  the  savings  bank,  which  the  State  law  required 
and  regulated,  which  vested  in  the  latter  superior  rights  or 
equities,  and  which,  in  the  possible  event  of  future  insol- 
vency, would  give  to  it  a  prior  claim  to  payment  from  the 
assets.  When  that  event  happened,  and  the  receiver  was 
appointed,  he  took  over  the  property  of  the  insolvent  con- 
cern, as  trustee  for  its  creditors  and  shareholders,  under  the 
same  conditions  as  the  bank  held  it,  and  subject  to  the  right  of 
this  plaintiff  to  l)e  the  first  paid  in  full  before  other  creditors  were 
paid."  So  I  say  here  the  plaintiffs,  U|)on  becoming  vested,  as 
receivers,   with  the   property   of  the  insolvent   Madison  Square 

487 


ILL.   CAS.  CHECKS.  [CH.  XVI. 

Bank,  held  it  subject  to  all  rights  lawfully'  acquired,  and  to  all 
superior  equities,  among  which  was  the  right  of  the  St.  Nicholas 
Bank,  by  virtue  of  an  agreement  valid  in  its  inception  and  at  all 
times,  to  apply  the  securities  in  its  possession  in  reimbursement 
of  its  payments  of  checks  presented  through  the  clearing  house 
on  the  morning  of  August  9,  1893, —  payments  which  it  was 
obliged  to  make,  as  well  by  the  rule  of  commercial  honor  as  by 
force  of  the  obligations  imposed  by  the  constitution  and  rules  of 
the  clearing  house.  Nor  do  the  cases  of  Overman  v.  Bank,  30 
N.  J.  Law,  Gl,  and  Merchants'  Bank  v.  National  Bank,  139 
Mass.  618;  2  N.  E.  89,  referred  to,  touch  tbis  question  of  the 
obligation  of  the  clearing  bank  under  the  constitution  and  rules 
of  the  clearing  house,  and  with  reference  to  which  the  nonmember 
had  contracted, —  a  distinction  recognized  in  the  Overman  case 
cited. 

The  plaintiff's  counsel  suggests  a  possible  illustration  of 
the  effect  of  the  construction,  which  is  given  to  this  section 
of  the  clearing-house  constitution.  He  says  all  the  credit- 
ors of  the  Madison  Square  Bank,  becoming  aware  of 
its  insolvency,  might  have  drawn  checks  upon  their  de- 
posits, and,  if  they  succeeded  in  getting  them  presented  by 
clearing-house  banks,  the  St.  Nicholas  Bank  would  have  been 
compelled  to  pay  them,  to  its  possible  ruin.  The  illustration, 
however,  proves  nothing.  That  may  be  said  to  have  been  a  risk 
assumed  by  the  St.  Nicholas  Bank,  but  very  much  of  the  business 
of  the  land,  and  especially  that  portion  which  is  done  in  Wall 
street,  is  conducted  upon  faith ;  and  experience  has  shown  that 
it  has  not,  in  the  main,  been  misplaced.  For  such  a  contingency 
as  counsel  suggests,  it  was-  necessary  that  the  officers  of  the 
Madison  Square  Bank  should  have  been  parties  to  an  immoral  and 
illegal  scheme.  The  St.  Nicholas  Bank  must  be  deemed  to  have 
contemplated  and  to  have  assumed  every  risk,  in  undertaking  to 
become  responsible  for  the  Madison  Square  Bank,  and  to  have 
exercised  such  reasonable  judgment  in  doing  so,  and  to  have 
taken  such  security  against  loss  therein,  as  the  practical  observa- 
tion and  the  business  experience  of  its  officers  suggested. 

The  conclusion  I  have  reached  is  that  the  insolvency  of  the 
Madison  Square  Bank  did  not  excuse  the  St.  Nicholas  Bank  from 
theperformanceofitsobligationstowardstheclearing-house  banks. 
What  rather  empliasizes  the  Interest  in  the  question  of  the  right  of 
the  St.  Nicholas  Bank  to  clear  and  pay  on  August  9,  1893,  all  the 
checks  drawn  upon  the  Madison  Square  Bank  and  presented  by 
clearing-house  banks,  is  the  fact  that  there  were  four  checks,  ex- 
ceedingin  the  aggregate  the  sum  of  $300,000,  whichwere  drawn  un- 
der somewhat  peculiar  circumstances.  I  may  refer  to  two  of  thtm, 
ao-areirrating  $250,000,  which  were  drawn  Ijy  Mr.  Danforth,  then 
State  treasurer,  on  August  8,  1893,  who  had  heard  enough,  in 
some  way,  to  take  alarm  at  the  situation  of  the  Madison  Square 
Bank,  with  which  were  Slate  funds  oti  deposit.  He  aa-rauged  to 
deposit   them  with    the  Manhattan  Trust  Company,  which  kept 

488 


CH.  XVI.]  CHECKS.  ILL.  CAS. 

accounts  with  the  Chase  and  the  Continental  National  Banks,  and 
which  had  its  checks  cleared  through  them.  The  two  checks  were 
handed  into  the  two  banks  at  a  little  before  10  o'clock  of  the 
morning  of  August  9,  1893,  and  were  at  once  sent,  with  all  other 
checks,  to  the  clearing  house,  where  the  business  of  clearances 
commences  to  be  transacted  at  10  o'clock.  The  evidence  conclu- 
sively shows  that  there  was  nothing  unusual  in  this  transaction. 
It  is  the  general  and  invariable  custom  of  the  b:ink3  in  New  York 
City  to  pass  all  checks  dated  u[)on  the  previous  day,  and  received 
between  10  o'clock  of  that  day  and  10  o'clock  in  tlie  morning  of 
the  day  following,  by  hand  or  by  mail,  through  the  clearing 
house,  with  the  clearances  of  that  morning.  Checks  may  come 
in  the  morning  by  mail,  or  may  be  brought  in  by  local  deposi- 
tors, before  10  o'clock;  and  it  is  considered  to  he  regular,  and 
in  the  exercise  of  i)usiness  prudence,  to  have  them  cleared  as 
promptly  as  the  rules  allow.  In  this  case  there  is  nothing  to 
show  that  the  officers  of  the  Madison  Square  Bank  knew  of  the 
manner  in  which  the  State  trettsurer's  checks  were  deposited  for 
payment  by  the  Manhattan  Trust  Company,  or  that  they  had 
anything  to  do  with  their  drawing.  It  ap[)ears  tliat  that  com- 
-pany  acted  in  good  faith  in  the  matter,  and  Mr.  Waterbury,  its 
president,  testified  that  there  was  nothing  unusual,  or  contrary 
to  the  usual  course  of  business,  in  getting  Mr.  Danforth's  checks 
put  promptly  through  the  clearing  house  that  morning;  and  it  is 
difficult  to  see  how  )t  would  be  material,  if  it  was  otherwise.  As 
to  the  two  banks  wliich  acted  for  the  trust  company,  they  appear 
to  have  merely  performed  their  duty  to  their  depositor,  in  pass- 
ing the  checks  severally  through  the  clearing  house.  Nor  can  it 
be  pretended  that  the  St.  Nicholas  Bank  had  any  knowledge  or 
notice  respecting  these  checks,  or  any  of  the  checks,  which  it 
paid  in  ils  clearances  of  August  9lh.  Its  officers  had  no  knowl- 
edge of  the  insolvency  of  the  Madison  Square  Bank  until  that 
morning.  Ils  notices  of  the  day  previous,  to  the  various  banks, 
that  it  would  no  longer  continue  to  clear  for  the  Madison 
Square  Bank,  were  based  on  a  dissatisfaction  with  its  failure 
to  keep  good  its  promised  daily  cash  balance  of  deposits. 
Until  the  clearing-house  committee  completed  ils  examination 
of  the  condition  of  the  latter  bank,  in  the  afternoon  of  the 
8lh  (}f  August,  it  was  not  known  how  it  stood.  The  time 
was  one  of  great  excitement  and  of  distrust  in  financial  cir- 
cles, wliicli  cast  its  shadow  over  many  banks ;  and  a  bank  to 
justify  be  ing  assisted  l)y  the  associated  bank,  must  show  itself  to 
possess  sufficient  resources,  in  the  possession  of  assets  of  real 
value.  Tlic  altonlion  of  the  clearing-house  committee  being 
called  to  the  Madison  Square  Bank,  their  examination  resulted  in 
the  advice  that  it  should  suspend.  They  diil  not  decide  as  to  the 
solvency  of  the  bank.  It  mi<:ht  resume,  if  it  succeeded  in  making 
such  arrangements  as  would  put  it  in  the  possession  of  funds 
by  realization  upon  its  assets.  However  that  might  be,  the  bank 
decided  not  to  open  its  doors  on  the  following  morning.     It  was 

489 


ILL.  CAS.  CHECKS.  [CU.  XVI. 

sffirmatively  testified  to  by  the  cashier  of  the  St.  Nicholas  Bank 
that  they  had  no  suspicion  of  tlie  inability  of  the  Madison  Square 
Bank  to  continue  its  business,  when  sending  out  notices  to  other 
banks,  but  thought  it  unsafe  to  continue  clearing  for  it,  in  view  of 
its  past  conduct.  If  the  evidence  showed  any  knowledge  in  the 
St.  Nicholas  Bank  as  to  the  particular  checks,  as  to  which  so 
much  has  been  urged,  and  which  it  paid  in  the  clearances  of  the 
morning  of  August  9th,  or  if  it  had  such  nolite  concerning  the 
designs  of  their  drawers  as  to  make  it  an  abettor  in  an  unlawful 
scheme  to  obtain  a  preference  over  other  creditors,  a  very  differ- 
ent question  would  be  presented.  But  there  was  nothing  whatever 
to  charge  it  with  any  knowledge  or  notice,  and  all  the  evidence 
goes  to  prove  that  it  acted  in  perfect  good  faith  ;  and  that  being 
so,  and  its  payment  of  checks  passing  through  the  clearing  house 
on  the  morning  of  August  9th  having  been  made  in  discharge  of 
the  liability  resting  upon  it,  under  the  constitution  and  rules  of 
the  association,  it  cot  only  could  not,  but  it  should  not,  be  made 
to  suffer  a  loss.  The  knowledge  possessed  by  it,  in  common 
with  the  public,  in  the  morning  of  August  9th,  did  not  change  its 
position  or  affect  its  liability.  The  presumption  was  thi.t  every 
check  presented  at  the  morning's  clearances  was  held  for  value, 
and  it  was  for  the  plaintiffs  to  rebut  that  presumption,  and  to 
show  that  the  banks  presenting  checks  were  not  acting  in  good 
faith  in  what  they  did,  but  merely  as  agents  for  the  drawers,  in 
obtaining  the  funds  drawn  against.  They  failed  to  do  so.  More 
than  that,  the  evidence  established  the  contrary,  except  in  the 
possible  instances  of  the  two  checks  drawn  by  the  Uhlmans, 
which  were  two  of  the  four  checks  I  mentioned  as  taking  the 
clearances  of  August  9,  1893,  out  of  the  ordinary.  I  deem  it 
unnecessary  to  discuss  the  facts  respecting  them.  The  St.  Nich- 
olas Bank  was  in  no  respect  more  informed  about  their  making 
or  their  collection  than  it  was  about  the  other  checks.  If  there 
was  anything  irregular  concerning  them,  I  agree  with  the  learned 
referee  that  the  question  would  affect,  not  the  St.  Nicholas  Bank, 
but  the  right  of  the  bank  which  presented  them  to  hold  their 
proceeds.  If  we  leave  out  of  consideration  the  two  Uhlman 
checks,  the  balance  of  account  is  still  against  the  plaintiffs  and 
their  action  would  have  to  fail  any  way.  For  these  reasons,  as 
for  those  which  were  well  expressed  by  the  very  learned  referee, 
and  with  which  they  are  in  harmony,  I  think  the  judgment  below 
was  right,  and  I  advise  its  affirmance  here.  All  concur,  except  An- 
drews, C.  J.,  and  Peckham,  J.,  dissenting.     Judgment  affirmed. 


Liability  of  Collecting-  Bank  for  Worthless  Check 
Received  hy  it  in  Payment  of  Note  —  When  Check 
Operates  as  Assignment  pro  tanto  of  Fund  on  Deposit. 

Bank  of  Antigo  v.  Union  Trust  Co.,  149  111.  343  (3G  N.  E.  1029). 

Appeal  from  appellate  court  first  district. 

Assumpsit  by  the  Bank  of   Antigo  against   the  Union   Trust 

490 


CII.  XVI.]  CHECKS.  ILL.  CAS. 

Company  upon  a  check  drawn  on  the  defendant  by  A.  Weed  & 
Co.  Defendant  obtained  jiidgraent,  which  was  affirraed  by  the 
appellate  court.     Plaintiff  appeals.     Afflnned. 

On  and  prior  to  September  2,  1890,  A.  Weed  &  Co.  were  doing 
business  at  Ashland,  Wis.,  and  that  day  delivend  their  chick  for 
$3,000,  drawn  upon  appellee  bank,  to  appellant,  and  took 
up  a  note  owned  by  appellee,  then  due,  against  Hoxie  & 
Mellor,  theretofore  sent  to  appellant  by  appellee  for  collec- 
tion, and  on  which  A.  Weed  &  Co.  were  indorsers.  The  check 
was  as  follows:  "Chicago,  September  2d,  1890.  The  Union 
Trust  Company:  Pay  to  the  order  of  Amos  Baum,  cashier,  three 
thousand  dollars.  A.  Weed  &  Co."  The  said  Baum,  cas'hier 
of  appellant  bank,  accepted  the  check  as  so  much  cash,  canceled 
the  note,  delivered  it  to  A.  Weed  &  Co.,  and  remitted  the 
amount,  less  $3  charges,  to  appellee  by  draft  on  appellant's  cor- 
respondent, the  Merchants'  Bank  of  Chicago,  wliich  draft  was 
duly  paid,  etc.  The  check  was  also  sent  to  the  Merchants' 
Bank  of  Chicago  by  appellant  for  collection,  and  presented  to 
appellee  for  payment  on  September  4,  1890,  and  dishonored  ; 
whereupon  due  protest  was  made,  etc.  On  August  25,  1890, 
upon  certain  representations  made  by  A.  Weed  &  Co.,  appellee 
was  to,  and  di  1  on  Se|)lemher  3d  following,  discount  for  them 
$11,2I9.G5  of  Hoxie  &  Mellor  paper,  the  same  being  three  notes 
of  $3,000,  S3. 000,  and  $5,430,  respectively.  On  Sept("ml)er  2<1, 
A.  Weed  &  Co.  had  to  their  credit  on  the  books  of  appellee 
$809.25,  and  on  that  day  and  the  following,  prior  to  credit- 
ing their  account  with  the  proceeds  of  tlie  discounted  paper, 
had  overdrawn  their  account  to  the  amount  of  $5,760.57; 
so  that,  after  deducting  overdrafts,  a  balance  was  left  to 
their  credit  on  ap[)ellee's  books,  at  the  close  of  business  on 
September  3d,  of  $5,489  08.  On  the  evening  of  this  day, 
appellee  became  aware  of  the  failure  of  Hoxie  &  Mellor,  and  at 
the  opening  of  business  on  the  morning  of  September  4th,  cli:irged 
back  to  A.  Weed  &  Co.  the  $5,430  note,  less  discount  ($85.05), 
and  returned  it  to  them  with  the  following  letter:  "Chicago, 
September  4,  1890.  Messrs.  A.  Weed  «fc  Co.,  Ashland,  Wis. — 
Dear  Sirs:  Upon  being  infoinied  yesterday  that  Messrs.  Hoxie  & 
Mellor  had  failed,  we  deducted  the  amount  of  the  note  of  $5,430, 
less  discount,  $85. ()9, — $5,344.31,  —  from  j'our  account,  and 
herewith  return  the  note.  Yours,  respectfully,  G.  M.  Wilson, 
Cashitr,"  —  thus  leaving  a  balance  to  the  credit  of  A.  Weed  «fe 
Co.  of  $144.77  at  the  time  of  tlie  presentation  of  the  check  for 
payment  on  that  day.  An  action  was  brought  by  appellant 
ngainst  appellee  on  the  check  in  the  circuit  court  of  Cook  county, 
and  resulted  in  verdict  and  judgment  for  appellee.  On  appeal 
to  the  appellate  court,  this  judgment  was  tillirmed,  and  plaintiff 
below  prosecutes  this  further  ai)peal. 

SiioPK,  J.  (after  stating  the  facts).  It  is  contended  that  the 
contract  between  a|)pellee  and  Weed  &  Co.  under  wliich  the 
three  notes  of  Mellor  &  Hoxie  were  discounted  was  an  entire 

491 


ILL.  CAS.  CHECKS.  [CH.   XVI. 

contract,  and  that  appellee  had  no  right  to  rescind  as  to  the 
$5,430  note,  and  retain  the  proceeds  of  the  two  $3,000  notes. 
It  is  true,  as  stated  by  counsel  for  appellee,  that  the  general  rule 
is  that,  when  a  party  wishes  to  rescind  an  entire  contract,  he 
must  rescind  it  in  tuto  or  not  at  all.  Harzfeld  v.  Converge,  105 
111.  534.  But  it  is  not  to  be  overlooked  that  this  is  a  rule  of  con- 
struction, based  upon  the  intention  of  the  parties  to  the  contract, 
and  not  a  rule  of  law  controlling  that  intention.  2  Pars.  Cont. 
521.  Conceding  that  the  discounting  of  the  notes  in  question 
constituted  a  contract  between  appellee  and  Weed  &  Co.,  it  does 
not  appear  from  the  record,  nor  is  it  claimed,  that  Weed  &  Co., 
have  treated  or  sought  to  treat  the  contract  as  entire  and  indivis- 
ible. On  the  other  hand,  it  does  appear  that  the  $5,430  note  was 
returned  to  them  by  appellee,  with  a  letter  informing  them  that, 
having  heard  of  the  failure  of  Hosie  &  Mellor,  the  makers  of  the 
notes,  the  amount  thereof  had  been  deducted  from  their  account, 
etc.  Weed  &  Co.  on  September  6,  1890,  sent  this  note  back 
to  appellee,  who,  on  the  8th,  again  returned  it  to  Weed  & 
Co.,  who,  ib  seems,  retained  it.  The  letter  of  Weed  &  Co. 
of  the  6th,  or  their  purpose  in  returning  the  note,  is  not 
shown.  Nor  does  it  appear  that  they  then  or  afterwards 
asserted  or  undertook  to  assert  under  the  contract  any  right 
against  appellee.  In  the  absence  of  any  proof  to  the  contrary, 
it  may,  we  tiiink,  be  said  that  Weed  &  Co.  by  their  silence  have 
themselves  elected  to  treat  the  contract  as  rescinded  as  to  the 
$5,430  note.  If  A.  Weed  &  Co.  have  acquiesced  in  the  rescission 
of  the  contract  as  to  the  $5  430  note  by  appellee,  it  cannot  be  in 
the  logic  of  things  that  apptllaut  can  succeed  to  any  greater 
rights  under  the  contract  than  A.  Weed  &  Co.,  who,  as  we  have 
seen,  in  the  absence  of  countervailing  proof  on  that  question, 
have  elected  to  acquiesce  in  the  rescission.  Appellant  being  under 
no  constraint,  in  order  to  protect  its  own  interests  or  rights,  to 
pay  the  debt  of  A.  Weed  &  Co.  to  appellee,  l>ut  having,  as  will 
be  seen,  paid  the  same  voluntarily,  could  not  be  subrogated  to 
the  rights  of  A.  Weed  &,  Co.  in  the  premises.  Hough  v.  Insur- 
ance Co.,  57  111.  318;  Young  v.  Morgan,  89  111.  199;  Beaver  v. 
Blanker,  94  III.  175. 

But  were  the  foregoing  considerations  not  warranted  by  this 
record,  we  think,  under  the  facts  in  this  case,  that  the  discount- 
ing of  the  notes  constituted  an  apportionable  contract.  The 
record  shows  that  in  its  letter  of  Septeml)er  1,  1890  (in  reply 
to  one  from  A.  Weed  &  Co.  containing  the  proposition  for  dis- 
counting $15,000  of  Hoxie-Mellor  paper),  appellee  said  that  it 
could  "  use,  say,  $10,000  of  the  paper"  referred  to  "from  Sep- 
tember 1st  to  4th,"  and  that,  under  this  arrangement,  the  three 
separate  notes  above  mentioned  were  discounted  by  aiipellee.  It 
is  not  contended  tliat  appellee  had  not  the  right,  had  the  integrity 
of  the  notes  at  the  time  been  questionable,  to  have  refused  to 
discount  any  or  all  of  them.  Kach  note  constituted,  in  and  of 
itself,  a  se,  arate  and  independent  contract,  upon  a  distinct  con- 

492 


CH.  XVI. J  CHECKS.  •  ILL.  CAS. 

sideration,  and  the  books  of  the  bank  show  that  they  were  dis- 
counted as  separate  and  distinct  entries.  The  rule  as  laid  down 
by  Mr.  Parsons  (volume  2,  star  p.  517)  is:  "If  the  part  to  be 
performed  by  one  party  consists  of  several  distinct  and  separate 
items,  and  the  price  to  be  paid  by  the  otlier  is  apportioned  to 
each  item  to  be  performed,  or  is  left  to  he  implied  by  law, 
such  a  contract  will  generally  be  held  to  be  severable."  Anl 
Mr,  Wharton  (Cont.,  §  748)  says:  "  Wlieu  a  consideration  is 
divisible,  and  the  i)iice  can  be  a|)portioned,  then,  if  a  distinct 
divisible  portion  of  the  consideration  fails,  the  price  paid  for  such 
portion  can  be  rccovoi-ed  buck  ;  "  and  that,  "  in  cases  *  *  * 
in  which  the  consideration  is  divisible,  the  purchaser  may  elect 
to  take  what  can  be  delivered  to  him,  and  in  such  case,  if  the 
purchase  money  has  been  paid,  he  can  recover  back  the  excess, 
or,  if  there  has  been  no  payment,  defend  pro  tanto."  See  cases 
in  notes.  In  Manufacturing  Co.  v.  Wakefield,  121  Mass. 
91,  where  the  action  was  an  account  for  certain  India-rubber 
goods  sold,  and  the  price  of  each  article,  and  discount  from 
the  gross  sum,  were  stated  in  the  account,  the  court,  in 
passing  upon  the  question  of  whether  the  contract  was  entire 
or  divisible,  said:  "  We  do  not  deem  this  contract  to  have  been 
an  entire  one.  That  a  contract  should  be  of  that  character,  it 
is  not  sufflcient  menly  tl»at  the  subjects  of  purchase  are  in- 
cluded in  the  same  instrument  of  conveyance.  If  but  one  con- 
sideration is  paid  for  all  the  articles,  so  that  it  is  not  possible  to 
determine  the  amount  of  consideration  paid  for  each,  the  con- 
tract is  entire.  Miner  v.  Bradley,  22  Pick.  457.  *  *  •  When 
many  different  articles  are  bought  at  tlie  same  time  for  distinct 
prices,  even  if  they  are  articles  of  the  same  general  descrii)tion, 
so  that  a  warranty  that  they  are  all  of  a  particular  quality  would 
apply  to  each,  tlie  contract  is  not  entire,  but  is  in  effect  a  sepa- 
rate contract  for  each  article  sold.  Johnson  v.  Johnson,  3  Bos. 
&  P.  162  ;  Miner  v.  Bradle}',  supra."  To  the  same  effect  is  the 
doctrine  stated  in  Wooten  v.  Walters,  110  N.  C.  251  ;  14  S.  E. 
734,  736,  where  the  sale  was  of  a  stock  of  merchandise  and  land. 
It  was  there  said  tliat,  "though  a  number  of  things  be  bought 
together  without  fixing  an  entire  price  for  the  whole,  but  the 
price  of  each  article  is  to  be  ascertained  by  a  rate  or  measure  as 
to  the  several  articles,  or  when  the  things  are  of  different  kinds, 
though  a  total  i)rice  is  named,  but  a  certain  price  is  affixed  to 
each  thing,  the  contract  in  such  cases  may  be  treated  as  a  sepa- 
rate contract  for  eacli  article,  although  tiiey  all  be  included  in 
one  instrument  of  conveyance  or  by  one  contract ;  "  citing  John- 
son r.  Johnson  and  Miner  r.  Bradle3',  supra.  See,  also.  Hill  ?•. 
Reave,  11  Mete.  (Mass.)  268;  Gushing  r.  Rice,  46  Me.  302; 
Proton  r.  Spaulding,  120  111.  208  ;  10  N.  E.  903.  We  are,  liow- 
cver,  referred  by  counsel  for  appellant  to  the  case  of  Ilarzfeld  v. 
Converse,  supra,  as  maintaining  a  contrar}-  view.  Tliis  is  a  mis- 
apprehension. That  case  falls  clearly  within  the  rule,  announced 
in  the  Massachusetts  and  other  cases,  that  where  "tlie  purcliase 

493 


ILL.  CAS.  CHECKS.  [CH.  XVI. 

is  of  goods  as  a  particular  lot,  *  *  *  or  the  number  of 
barrels  in  which  the  goods  are  packed,  the  contract  is  held  to  be 
entire."  Manufacturing  v.  Wakefield,  su[)ra,  and  cases  therein 
collated.  Moreover,  at  tlie  time  of  the  discounting  of  said  notes, 
Weed  &  Co.  had  overdrawn  their  account  with  appellee  $5,760.57. 
By  the  judgments  of  the  circuit  and  appellate  courts,  the  con- 
troverted question  of  fact  as  to  fraud  on  the  part  of  Weed  &  Co. 
in  the  transaction  is  conclusively  settled,  and  that  such  fraud 
was  consummated  before  the  paj'ment  of  Weed  &  Co.'s  over- 
drafts. This  being  so,  appellee  would  be  exoused  from  surren- 
dering up  to  Weed  &  Co.  the  two  $3,000  notes.  Preston  v. 
Spaulding,  supra,  and  cases  cited.  We  are  therefore  of  opinion 
that  appellee  had  the  right  to  rescind  the  contract,  as  it  did,  by 
returning  to  Weed  &  Co.  the  $5,430  note,  and  charging  the  same 
back  tj  their  account. 

It  is  also  insisted  that,  although  appellee  had  the  right  to 
partially  rescind  the  contract  as  against  Weed  &  Co.  it  could  not 
legally  exercise  such  riglit  as  against  appellant,  it  being  a  bona 
fide  holder  of  the  $3,000  check  in  question,  drawn  by  Weed  & 
Co.  on  appellee.  It  appears  that  about  September  2,  1890, 
appellee  sent  to  appellant  for  collection  and  returns  a  $3,000 
note,  then  due,  against  Hoxie  &  Mellor,  owned  by  appellee,  and 
upon  which  Weed  &  Co.  were  indorsers.  On  that  day  Weed  &, 
Co.  gave  appellant  the  check  in  question,  drawn  on  appellee  for 
the  amount  of  the  note,  which  was  at  once  canceled  by  appellant 
and  surrendered  to  Weed  &  Co.  Appellant  received  the  check 
as  cash,  and  remitted  the  proceeds,  less  charges,  to  appellee, 
by  draft  on  Blerchants'  Bank  of  Chicago.  This  remittance 
was  received  by  appellee  on  September  3d,  and  paid.  On  the 
next  day,  about  noon,  the  check  sued  on  was  presented  to 
appellee  for  payment,  which  was  refused.  Appellee,  in  tlie  mean- 
time, between  the  receipt  of  the  remittance  and  presentation  of 
the  check  for  payment,  having  become  apprised  of  tiie  business 
failure  of  Hoxie  &  Mellor  and  the  fraud  of  Weed  &  Co.,  had 
charged  back  to  Weed  &  Co.'s  account,  and  returned  to  them, 
the  said  $5,430  note,  less  discount  ($85.65),  leaving  a  balance  to 
the  credit  of  Weed  &  Co.  of  $144.77,  only,  when  the  check  was 
presented.  It  is  not  shown  or  pretended  that  appellant,  in  mak- 
ing collection  of  said  note,  was  authorized  by  appellee  to  receive 
in  payment  thereof  anything  but  money.  When  appellant  re- 
ceived the  note  from  appellee  for  collection,  it  then  and  thereby 
became  the  agent  of  appellee  for  that  purpose ;  and  the  law  is 
well  settled  that  unless  such  agent  is  specially  authorized  so 
to  do,  he  has  no  right  to  accept  in  payment  of  his  principal's 
debt  anything  in  lieu  of  money.  Matthews  v.  Hamilton,  23 
111.  470 ;  Ward  v.  Smith,  7  Wall.  447  ;  Howard  v.  Chapman,  4 
Car.  &  P.  508;  Story  Prom.  Notes  (7ih  Ed.),  §§  115-389,  and 
notes.  Being  authorized  to  receive  money  only,  tlie  agent  has 
no  implied  power  to  receive  a  check  in  payment  (Hall  v.  Storrs, 
7  Wis,  253)  ;  and  where  the  collection  agent,  not  being  there- 
494 


CH.  XVI.]  CHECKS.  ILL.  CAS. 

unto  authorized,  accepts  in  payment  of  liis  principal's  demand 
a  clieck,  or  depreciated  currency,  and  loss  ensues  thereby,  he 
must  bear  it  (Ward  v.  Sraitli,  supr'i ;  Morse  Banks,  431,  432; 
Harlan  v.  Ely,  68  Cal.  522  ;  9  Pac.  947). 

But  it  is  claimed  Ihat  the  drawing  of  the  check  by  Weed  & 
Co.  on  appellee  operated  as  an  assignment  to  appellant  of  so 
much  of  the  fund  on  deposit,  against  ■which  it  was  drawn,  as  was 
necessary  to  pay  it.  As  between  the  drawer  and  drawee,  this  is 
doubtless  correct.  Union  Nat.  Bank  v.  Oceana  Co.  Bank,  80  III. 
212.  But,  in  order  to  clmrge  the  bank  with  the  amount,  it  is  in- 
dispensable that  the  check  be  fir>t  presented  to  it  for  pay- 
ment, or  some  other  act  done  equivalent  thereto.  This  rule 
was  announced  in  the  early  case  of  Munn  v.  Burch,  25  III.  35, 
where  it  was  held  that  the  check  of  a  depositor  on  his  banker, 
delivered  to  another  for  value,  transfers  to  the  payee  therein, 
and  his  assigns,  so  much  of  the  depotit  as  the  check  calls  for, 
and  that,  when  presented  to  the  bank  for  payment,  the  banker 
becomes  liable  to  the  holder  for  the  amount  thereof  provided 
the  drawer  has  at  the  time  sufficient  funds  on  deposit  to  pay  it. 
And  this  doctrine  has  been  subsequently  reaffiimcd  in  numerous 
decided  coses  in  this  court,  among  which  see  Insurance  Co.  v. 
Stanford,  28  111.  1G8  ;  Bickford  v.  Bunk,  42  111.  238  ;  P^juitli  Nat. 
Bank  ^^  City  Nat.  Bank,  68  111.  398;  Bank  r.  Jones,  137  111. 
634  ;  27  N.  E.  533.  That  appellee  had,  belween  the  time  of 
making  the  check  and  its  presentation  for  payment,  on  deposit  to 
the  credit  of  Weed  &  Co.,  funds  sufficient  to  meet  the  check,  can 
have  no  bearing  on  the  question.  Appellee  had  no  notice  of  the 
existence  of  the  check  until  presented  for  payment,  and  the 
deposit  against  which  it  was  drawn  having  been,  as  we  have  seen, 
depleted  by  proper  charges  and  deductions  until  only  a  meager 
sura  remained,  there  was  no  sufficient  fund  lelt  on  deposit  out  of 
which  it  could  be  paid,  and  the  check  was  therefore  rightfully 
dishonored.  Other  errors  are  assigned,  which  have  been  care- 
fully considered,  but,  in  view  of  what  has  been  said,  no  useful 
purpose  would  be  served  by  a  discussion  of  them.  The  judg- 
ment of  the  appellate  court  will  be  affirmed.     Affirmed. 

495 


CHAPTEE    XVII. 

PAYMENT  OF  AND  BY  BILLS,  NOTES  AND  CHECKS. 

Section  178.  Payment  distinguished  from  sale  or  transfer. 

179.  Payment  by  -wliom. 

180.  Payment  to  whom. 

181.  Conditions    of    Payment — Legal    tender — Surrender    of 

paper  —  Receipt. 

182.  Payment  by  bill  or  note  —  Presumption  as  to  its  absolute 

or  conditional  character. 

183.  Payment  by  check. 

§  178.   Payment  distingTiishcd  from  sale  or  transfer. — 

Payment  consists  of  the  performance  of  a  contract,  with  the 
intention  of  extinguishing  1  he  liability  of  the  party  paying  or 
of  tlie  party  for  whcm  the  payment  has  been  ma;le.  The 
same  outward  acts  may  and  do  often  constitute  a  sale,  when 
the  parties  intend  to  transfer,  instead  of  extinguishing,  the 
liability  on  the  contract.  In  each  case  the  real  intention 
determines  the  character  of  the  transaction  ;  and  it  must  be 
determined,  in  the  absence  of  an  express  understanding  or 
agreement,  by  circumstances  which  are  sufficient  in  strength 
to  overcome  the  general  presumption  of  law,  that  payment 
of  money  on  a  contract  is  intended  as  a  technical  payment, 
and  a  consequent  extinguishment  of  the  contract  or  liability 
on  such  contract.^  lu  ap[)lying  this  question  to  payment  of 
bills,  notes  and  checks,  the  most  important  circumstance,  in 
determining  the  character  of  the  transaction,  is  the  relation 
of  the  party  paying  to  the  bill  or  other  commercial  paper. 

§  179.  Paj'ment  by  whom. —  It  is  a  well-settled  rule  of 
the  law  of  contracts,  that,  while  only  a  party  to  a  contract 
can  make  tender  of  payment,  so  as  to  affect  the  claims  of 

1  Lancey  v.  Clark,  G4  N.  Y.   206  (21  Am.    R°p.   C04) ;   Dougherty  v. 
Deeney,  45  Iowa,  443;  Swope  v.  Lefllngwell,    72  Mo.  348;  Greening   v. 
Patten,  51  Wis.  146  (18  N.  W.  107);  Moran  v.  Abbey,  58  Cal.  163. 
406 


CH.  XVII.]  PAYMENT,  §   179 

the  holder  in  any  respect  whatever;  actual  payment,  naade 
with  the  intention  of  extinguishing  the  contract,  when  ac- 
cepted by  the  holder,  can  he  made  by  any  one,  whether  he 
be  a  psirty  to  the  contract  or  not.  And  this  is  equally 
true  of  bills,  notes  and  checks. 

If  a  stranger  makes  payment  of  a  bill,  note  or  check, 
payable  to  bearer,  without  any  agreement  as  to  his  inten- 
tion in  making  such  payments,  it  will  probably  be  presumed 
that  he  intended  to  acquire  title  to  such  bill  or  note,  and 
not  to  extinguish  the  liabilities  of  the  parties  to  the  paper. 
But  if  the  paper  is  payable  to  order  and  is  transferred  to 
him  without  indorsement,  the  presumption  is  that  it  is  a 
payment  and  not  a  sale  or  transfer,  even  though  the  paper 
has  not  been  canceled  or  payment  acknowledged  thereon.^ 
This  presumption  ma}',  however,  be  rebutted  by  proof  of 
intention,  and  it  is  a  question  for  the  jury  to  determine  in 
the  light  of  all  the  circumstances  of  the  case.- 

Any  party  to  the  paper  has  the  right  to  make  or  tender 
payment.  If  the  party  paying  is  the  primary  obligor, — 
the  maker  of  a  note  or  accei)tor  of  a  bill, —  the  payment 
will  extinguish  the  bill  or  note  completely,  and  all  the 
parties  to  it  are  discharged.  And  this  is  true,  not  only 
when  the  party  paying  is  the  ostensible  and  actual  primary 
obligor, "^  but  also  where  he  is  an  ostensible  secondary 
obligor,  for  whose  accommodation  the  bill  or  note  has  been 

1  Binford  v.  Adams,  104  lud.  41;  Gilliam  v.  Davis,  7  Wasii.  332  (35  P. 
69);  Eastman  v.  Pluraer,  32  N.  H.  238;  Bailey  v.  Malvin,  53  Iowa,  371 
(5  N.  W.  515).  But  see  Kennedy  v.  Chapin,  67  Md.  454  (10  A.  243); 
Dodge  V.  Freedraau's  &c.  Trust  Co.,  93  U.  S.  379;  Swope  v.  LefDogweli, 
72  Mo.  348. 

2  Deacon  v.  Stodhart,  2  Man.  &  G.  317;  Wilcoxen  v.  Logan,  91  N.  C. 
449;  Doughertys.  Deeney,  45  Iowa,  443;  Hall  v.  Kimball,  77  111.  161; 
Voltz  u.  Nat.  Bank,  158  111.  532  (42  N.  E.  69)  (payment  of  checks  by 
clearing-house  agent);  Swope  v.  Leflangwell,  72  Mo.  341;  Campbell  v. 
Allen,  38  Mo.  App.  27. 

3  Gardner  v.  Maynard,  7  Allen,  456  (83  Am.  Dec.  699) ;  Slade  v.  Mutrie, 
156  Mass.  19  (30  N.  E.  168)  (part  payment);  Eastman  v.  Plumer,  32  N. 
11.  238;  Stevens  v.  Hannan,  88  Mich.  13  (49  N.  W.  874  (payment  by  one 
of  two  joint  makers)  ;  Boyd  v.  Bell,  G!)  Tex.  735  (7  S.  W.  657).  But  see 
Sater  r.  Hunt,  66  Mo.  App.  527. 

82  497 


§   179  PAYMENT.  [CH.   XVII. 

negotiated.  For  example,  if  A.  for  the  accommodation 
of  B.  makes  a  note  payable  to  the  order  of  the  latter,  who 
negotiates  it  and  at  maturity  i)ays  the  note,  payment  by  B. 
will  operate  as  a  complete  extinguishment  of  all  liability  on 
such  note,  and  a  subsequent  tiant^fer  of  it  to  an  innocent 
purchaser  will  give  him  no  cause  of  action  against  A.^  So, 
also,  if  payment  has  been  made  of  such  a  note  by  the 
maker,  A.,  it  will  constitute  a  complete  extinguishment  of 
the  paper,  so  as  to  prevent  its  reissue  or  further  negotia- 
tion :  but  A.  would,  of  course,  have  his  cause  of  action 
against  B.  for  reimbursement,  and  the  canceled  note  may 
be  put  in  evidence  in  proof  of  his  claim. ^ 

Where,  however,  payment  is  made  by  a  secondary 
obligor,  by  an  indorser  or  the  drawer  of  a  bill,  in  a  case 
where  the  paper  has  not  been  negotiated  lor  his  accommo- 
dation, payment  by  him  simply  extinguishes  his  own  liabil- 
ity and  the  liability  of  subsequent  indorsees,  and  leaves 
intact  the  causes  of  action  against  the  primary  obligor  and 
all  prior  secondary  obligors,  whose  liabilities  have  been 
preserved  by  the  ])roper  presentment,  protest  and  notice  at 
the  time  of  maturity.  And  an  indorser,  or  drawer,  so  pay- 
ing, by  canceling  all  subsequent  indorsements,  has  the 
right  by  his  own  fresh  indorsement  to  reissue  the  paper, 
the  new  transferee  acquiring  the  right  to  proceed  on  the 
paper  against  all  the  prior  parties  thereto.-'' 

1  Gardner  n.  Maynard,  7  Allen,  457  (83  Am  Dec.  699) ;  Guild  v.  Gayer, 
17  Mass.  615;  Jones  v.  Broadhurst,  9  C.  B.  173;  Mead  v.  Small,  2  Me.  207 
(11  Am.  Dec.  62).  In  the  case  of  a  bill  payable  at  sight,  payment  may 
be  made  supra  protest  by  any  stranger  for  the  honor  of  one  or  more  of 
the  pai'ties  to  the  bill.  The  same  requirements  as  to  declarations  for 
whose  honor  he  pays  are  made  as  in  the  case  of  acceptance  siipi'a  protest. 
Denston  v.  Henderson,  13  Johns.  322;  Smith  v.  Sawyer,  55  Me.  lot)  (1)2 
Am.  Dec,  576);  Pirez  v.  Bank  of  Key  West,  30  Fla.  467  (18  So.  590). 

2  Griffith  V.  Reed,  21  Wend.  502  (34  Am.  Dec.  267);  First  Nat.  Bk.  v. 
Maxwell,  83  Me.  576  (22  A.  479)  ;  Ryan  v.  Doyle,  29  Ky.  363;  Bell  v.  Nor- 
wood,  7  La.  95;  International  Bank  v.  Bowen,  80  111.  541;  Woods  v. 
Woods,  127  Mass.  141 ;  Stark  v.  Alford,  49  Tex.  260;  Board  of  Education 
V.  Sinton,  41  Ohio  St.  504. 

.  3  French  r.  Jarvis,  29  Conn.  347;  West  Boston  Sav.  Inst.  v.  Thompson, 
124  Mass.  50G ;  St.  John  v.  Roberts,  31  N.  Y.    441   (88  Am.  Dec.  287) ; 

498 


en.  XVII.]  PAYMENT.  §    180 

If  an  indorser  :illows  his  pio[)erty  to  be  sold  in  satisfac- 
tion of  a  judgment  procured  against  liini  on  his  indorse- 
ment, of  a  note,  it  has  been  hchl  that  he  cannot  recover  of 
the  maker,  the  value  of  the  property  so  sold,  but  only  the 
amount  actually  credited  on  the  execution,  after  paying  the 
costs  of  the  sale;  since  it  was  his  duty  to  protect  his  own 
propeity  by  the  payment  of  the  note.^ 

§  180.  Payment  to  Avliom. —  For  the  purpose  of  extin- 
guishing the  lial)ilities  of  the  parties  to  the  pajier,  payment 
must  be  made  to  the  holder,  or  to  his  duly  authorized  agent. 
If  the  paper  is  payal)le  to  bearer  or  indorsed  in  blank, 
payment  may  be  made  to  any  one  having  possession  of  the 
bill  or  note,  however  defective  his  title  to  it  may  be,  if  the 
payor  does  not  know  of  such  defect. ^  But  if  the  paper 
is  payable  to  order,  payment  to  any  one  but  the  person,  to 
whose  order  it  is  payable,  or  his  authorized  agent,  will  not 
discharge  the  liabilities  of  the  parties,  unless  the  payee  was 
in  fact  entitled  to  receive  payment,  eiiher  in  his  own  right 
or  as  the  representative  of  the  holder.'^  Where  there  has 
been  no  indorsement,  the  party  having  actual  title  to  the 
bill  or  note  may  ])rove  his  title  by  extraneous  evidence  ;   as 

Tredway  v.  Antisdel,  86  Mich.  82  (48  N.  W.  956)  ;  Willis  v.  Willis,  42  W. 
Va.  522  (26  S.  E.  515)  ;  Fenn  v.  Duudale,  40  Mo.  63;  Stanley  v.  McElrath, 
86  Cal.  449  (25  P.  16).  But  see  Wallace  v.  Grizzard,  114  N.  C.  488  (19  S. 
E.  760),  where  payment  by  guarantors  was  held  to  be  absolute,  extin- 
guishing all  liabilities  on  and  rights  under  the  notes,  because  the  makers 
had  been  charged  up  in  their  accounts  with  the  guarantors,  with  the 
amounts  paid  on  the  notes.  And  see  Tiraberlake  u.  Thayer,  71  Miss.  279 
(U  So.  446). 

1  March  V.  Barnet,  114  Cal.  375  (46  P.  152). 

2  Dugan  V.  United  States,  3  Wheat.  172;  Bank  of  U.  S.  v.  United 
States,  2  How.  711 ;  Lamb  u.  Matthews,  41  Vt.  42;  Bachellor  v.  Priest,  12 
Pick.  390;  Cone  v.  Brown,  15  Rich.  2(i2;  Bank  of  Utica  v.  Smith,  18 
Johns.  230;  Mauran  v.  Lamb,  7  Cow.  174;  Grieve  v.  Schweitzer,  36  Wi-. 
554.  But  payment  to  an  unauthorized  person  knowingly  does  not  extin- 
guish liability.     Chnppelear  v.  Martin,  45  Ohio  St.  126  (12  N.  E.  448). 

3  Sims  V.  U.  S.  Trust  Co  ,  103  N.  Y.  472  (9  N.  E.  605)  ;  Doubloday  v. 
Kress,  50  N.  Y.  410;  Quinn  v.  Dresbach,  75  Cal.  159  (16  P.  762) ;  Paris  v. 
Moe,  60  Ga.  90;  Poa>-e  v.  Warren,  29  Mich.  9  (18  Am.  Rep.  58);  Porter 
r.  Cu-hman,  19  111.  572;  Stiger  v.  Bent,  111  111.  328;  Exchange  Nat.  Bank 
V.  Johnson,  30  Fed.  588;  Burke  v.  White,  61  Mo.  App.  521. 

4119 


§    181  PAYMENT.  [CH.   XVII. 

for  example,  in  the  ease  of  a  general  assignee,  assignee  in 
bimkruptcy,  personal  representative  of  a  deceased  holder, 
trustee  or  guardian  of  an  insane  person  or  infant.^ 

§  181.  Conditions  of  payment  —  Legal  tender — Sur- 
render of  paper  —  Receipt. — No  one,  without  the  consent 
of  the  holder,  can  make  payment  of  an  ordinary  bill  or 
note,  except  by  the  tender  of  money,  i.  e.,  legal  tender. 
If  the  bill  or  note  calls  for  the  payment  of  a  given  amount 
of  dollars  and  cents  in  general  terms,  the  payor  can  make 
payment  in  any  kind  of  money,  which  by  the  law  of  the 
land  is  declared  to  be  legal  tender.  At  the  present  time, 
the  legal  tender  constitutes  the  gold  and  silver  coin  of  the 
denomination  of  one  dollar  and  over,  and  the  United  States 
treasury  notes. ^  The  fact,  that  there  is  any  difference 
in  the  values  of  the  various  kinds  of  legal  tender  in  the 
markets  of  the  world,  does  not  aflect  the  right  of  the  payor 
to  select  the  kind  of  legal  tender,  in  which  to  make  pay- 
ment, as  long  as  the  bill  or  note  does  not  call  for  pay- 
ment in  any  particular  kind.  He  tenders  the  amount  of 
money,  called  for  by  the  bill  or  note,  whether  the  kind  he 
selects  be  depreciated  or  appreciated  in  value.^  But  if  the 
bill  or  note  calls  for  payment  in  any  particular  kind  of 
legal  tender  ;  for  example,  in  gold,  it  can  only  be  satisfied 
by  a  tender  of  that  kind,  and  the  holder  may  refuse  to 
receive  any  other.* 

If    the    paper    calls  for  payment  in   anything  else   than 

1  Leonard  v.  Leonard,  U  Pick.  280;  Sampson  v.  Fox,  109  Ala.  G62  (19 
So.  896).  See  Perry  v.  Perry  (Ky.),  32  S.  W.  755;  Nunneraacker  v. 
Johnson,  38  Minn.  390  (38  N.  W.  351)  ;  Lennon  v.  Brainard,  36  Minn. 
330  (31  N.  W.  172)  (assignee  under  defective  indorsement). 

2  Hepburn  v.  Griswold,  8  Wall.  604;  Legal  Tender  Cases,  12  Wall. 
4r.7;  Juillard  v.  Greenman,  110  U.  S.  421. 

3  Bush  u.  Baldrey,  11  Allen,  3G7;  Atwood  v.  Cornwall,  28  Mich.  336 
(15  Am.  Rep.  219);  Killough  v.  Alford,  32  Tex.  457  (5  Am.  Rep.  249); 
Oilman  v.  County  of  Douglass,  6  Nev.  27  (3  Am.  Rep.  237). 

4  Bronson  v.  Rodes,  7  Wall.  245;  Trebilcock  v.  Wilson,  12  Wall.  087; 
McGoon  V.  Shirk,  64  111.  408  (5  Am.  Rep.  122)  ;  Phillips  v.  Dugan,  21 
Ohio  St.  466  (8  Am.  Rep.  66);  Poett  v.  Stearns,  31  Cal.  78;  Tooke  u. 
Bonds,  29  Tex.  419;  Bridges  v.  Reynolds,  40  Tex.  204. 

500 


CH.  XVII.]  PAYMENT.  §   181 

legal  teuder,  a.s  in  "  l)ank-l)ill8,"  tender  of  such  currency 
will  be  sufficient.^ 

With  the  consent  of  the  holder,  payment  may  in  any  case 
be  made  in  something  other  than  legal  tender.  But  an 
agent  has  no  such  implied  authority.  In  the  absence  of 
express  authority,  he  cannot  receive  anything  but  nioneyin 
payment. 2  Before  making  payment,  the  payor  has  the 
right  to  demand  an  opportunity  to  examine  the  bill  or  note, 
for  the  purpose  of  assuring  himself  of  the  genuineness  of 
the  signatures  and  of  the  body  of  the  paper,  as  well  as  of 
the  title  of  the  holder  to  the  paper. "^ 

Another  condition,  which  the  payor  can  and  should  exact 
in  making  pajMueiit,  is  that  the  bill  or  note  paid  sh(Mild  be 
surrendered  to  him,  for  the  purpose  of  preventing  any 
further  claim  against  him  on  the  p:i[)er,  and  as  evidence  of 
the  fact  that  payment  has  been  made  in  full.*  It  is  doubt- 
ful whether  a  receipt  can  be  demanded.  The  better  author- 
ity is,  that  it  cannot,  however  valualile  it  may  be  as  strong 
evidence  of  [laj-nient.^ 

1  Davis  V.  rhillips,  7  Mou.  632;  D.llard  v.  Evans,  4  Ark.  175. 

2  DeMels  v.  Dagson,  53  N.  Y.  635;  Tuscaloosa  Cotton-seed  Oil  Co.  v. 
Perry,  85  Ala.  158  (4  So.  G35) ;  Moye  v.  Cogdoll,  69  N.  C.  93;  Buttrick  v. 
Roy,  72  Wis.  164  (39  N.  W.  345);  Speurs  v.  Ledergerber,  56  Mo.  465; 
Nunnemacker  v.  Johnson,  38  Minn.  390  (38  N. -W.  351);  Ilerriman  v. 
Shomon,  24  Kan.  387  (36  Am.  Rep.  261). 

3  Wheeler  v.  Guild,  20  Pick.  545  (32  Am.  Dec.  231) ;  Canal  Bank  v.  Bk. 
of  Albany,  1  Hill,  287;  Goddard  v.  Merchants'  Bk.,  2  Sandf.  247;  aff'd 
4  N.  Y.  147;  Adams  v.  Reeves,  68  N.  C.  134  (12  Am.  Rep.  627);  Wilcox  v. 
Aultman,  64  Ga.  544  (37  Am.  Rep.  92). 

*  Dugan  V.  United  States,  3  Wheat.  172;  Otisfleld  v.  Mayberry, 
63  Me.  197;  Freeman  v.  Boynton,  7  Mass.  483;  Baring  v.  Clark, 
19  P.ck.  220;  Bank  of  University  v.  Tuck,  96  Ga.  456  (23  S.  E. 
467);  Stone  v.  Clough,  41  N.  H.  290;  Bond  v.  Starrs,  13  Conn. 
412;  Norris  v.  Badger,  6  Cow.  440;  Storey  y.  Krewson,  55  Ind,  397 
(23  Am.  Rep.  668);  Fitzmaurice  v  Mosier,  116  Ind.  363  (16  N.  E. 
175)  (equity  will  compel  .surrender  of  a  fully  paid  note);  Brinkley  v. 
Going,  1  111.  366;  Buehler  v.  McCormick,  169  111.26!)  (48  N.  E.  287) ;  Be.^t 
V.  Crall,  23  Kan.  432  (33  Am.  Hep.  185).  See  Johnston  v.  Allen,  22  Fla. 
224. 

5  See  Jones  v.  Fort,  9  B.  &  C.  764;  Thayer  v.  Brackett,  12  Mass.  450. 
But  part  payment  may  be  required  to  be  noted  on  the  bill  or  note.  See 
Emerson  v.  Cutts,  12  Mass.  78;  Ward  v.  Howard,  88  N.  Y.  74. 

501 


§    182  -^  PAYMENT.  [CII.   XVII. 

§  182.  Payment  by  bill  or  note  —  Presumption  tis  to 
its  absolute  or  conditional  character. —  When  ;i  pay- 
ment is  made  of  a  debt  by  a  bill  or  note,  the  intention  of 
the  parties  —  whether  such  payment  shall  l)c  absolute,  and 
shall  therefore  extinguish  all  liability  on  the  original  debt, 
whether  the  bill  or  note  is  ultimately  paid  or  not,  or  only 
conditional  upon  its  being  honored  at  maturity,  —  may  of 
course  be  definitely  expressed  at  the  time  of  the  transaction  ; 
and  such  express  intention  cannot  be  controlled  by  any 
collateral  circumstances.  But  where  the  parties  have  given 
no  expression  to  their  intention  in  the  [)ien)isos,  it  is  left 
to  legal  presumption  to  determine  whether  the  payment  in 
such  a  case  is  absolute  or  conditional.  As  to  what  is  the 
presumption  of  law,  the  cases  aie  hopelessly  conflicting, 
the  general  tendency  being  to  hold  to  the  presumption, 
that  the  payment  is  conditional.  There  are  conflicting 
decisions  on  almost  all  of  the  possible  cases,  which  may 
arise. 

Thus,  it  has  been  held,  where  the  payment  is  made  by 
the  debtor's  own  note  of  a  precedent  or  contemporary 
debt,  it  is  a  conditional  payment.^  On  the  other  hand  it 
has  been  held  that  such  a  ivayment  by  l)ill  or  note  is  pre- 
sum[)tively  absolute. ^  Where  a  precedent  debt  is  paid  by 
the  bill  or  note  of  a  third  person,  whether  it  is  payable  to 
order  and  indorsed,  or  payable  to  bearer  and  unindorsed, 

1  Peter  u.  Beverly,  10  Pet.  532;  Baulv  of  United  States  v.  Daniel,  12 
Pet.  32;  Winsted  Bank  v.  Webb,  39  N.  Y.  325  (100  Am.  Dec.  435) ;  Bd.  of 
Education  v.  Fonda,  77  N.  Y.  350;  Nishtingale  v.  Chafee,  11  R.  I.  609 
(23  Am.  Rep.  531)  ;  Middlesex  v.  Thomas,  5  C.  E.  Gr.  (20  N.  J.  Eq.)  39 ; 
Morris  v.  Harveys,  75  Va.  726;  Archibald  v.  Argall,  53  111.  307;  Scott  v. 
Gilkey,  153  lil.  168  (39  N.  E.  265);  Farwell  v.  Salpaugh,  32  Iowa  582; 
Sutliffe  V.  Atwood,  15  Ohio  St.  186;  Geib  v.  Reynolds,  35  Minn.  331  (28 
N.  W.  923);  Wiles  v.  Robinson,  80  Mo.  47;  Welch  v.  AUington,  23  Cal. 
322;  Breitung  v.  Liadauer,  37  Mich.  217.  As  to  contemporary  debt,  see 
Sht'ehy  v.  Mandeville,  6  Cranch,  258. 

2  Ward  V.  Bourne,  56  Me.  61;  Dodge  v.  Emerson,  131  Mass.  467; 
Green  v.  Russell,  132  Mass.  536;  Smith  v.  Bettger,  68  Ind.  254  (34  Am. 
Rep.  256);  Franklin  Life  Ins.  Co.  v.  Wallace,  93  Ind.  7;  Morrison  v. 
Smith,  81  111.  221;  Houdle-s  v.  Reid,  112  111.  105;  Mehlberg  r.  Fischer, 
24  Wis.  GOT;  Tisdale  v.  Maxwell,  58  Ala.  40;  Rowe  v.  Collier,  25  Tex.  252. 

502 


CH.  XVII.]  PAYMENT.  §    182 

the  payment  is  generally  held  to  be  conditional  ^  with  a  few 
cases,  holding  such  payments  to  be  presumptively  abso- 
lute.^  But  there  seems  to  be  a  general  agreement  in  the 
case  of  the  payment  of  a  contemporaneous  debt  by  a 
stranger's  l)ill  or  note,  that  it  is  presumed  to  be  absolute, 
where  the  bill  or  note  is  payable  to  bearer  or  indorsed  in 
blank  by  some  prior  holder,  so  that  it  may  be  transferred 
without  indorsement;^  and  conditional^  wliere  the  p;iper  is 
payable  to  order,  and  can  be  transferred  only  by  imlorse- 
ment.^  It  is  also  generally  held  to  be  only  a  conditional 
payment,  where  in  the  renewal  of  a  note,  the  old  note  is 
retained  by  the  holder.^  But  where  the  old  note  has  l)een 
surrendered,  this  would  seem  to  be  undoubtedly  a  case  of 
absolute  payment,  and  so  it  has  been  held.® 

1  Downey  v.  Hicks,  14  How.  240;  Freeman  v.  Benedict,  37  Conn.  559; 
Coniiling  v.  King,  10  N.  Y.  440;  Potts  v.  Mayer,  74  N.  y.  594;  Gibson  v. 
Tobey,  46  N.  Y.  G37  (7  Am.  Rep.  397);  Wilhelrast?.  Schmidt,  84  III.  183; 
Gordon  v.  Price,  10  Ired.  L.  385;  Tilford  v.  Miller,  84  Ind.  185;  Cook  v. 
Beech,  10  Humph.  413.  But  see  Shaw  v.  Republic  L.  Ins.  Co.,  69  N.  Y. 
286. 

2  Dennis  v.  William?,  40  Ala.  633;  Ely  u.  James,  123  Mass.  36;  Draper 
V.  Sexton,  118  Mass.  427.  See  Bay  City  Bank  u.  Lindsay,  94  Mich.  176 
(54  N.  W.  42). 

3  Tobey  v.  Barber,  5  Johns.  68  (4  Am.  Dec.  326) ;  Gibson  v.  Tobey,  46 
N.  Y.  637  (7  Am.  Rep.  397);  Day  v,  Kinney,  131  Mass.  37;  Gordons. 
Price,  10  Ired.  L.  385;  Susquehanna  Fert.  Co.  v.  White,  G6  Md.  444  (7 
A.  802).  But  see  Huse  u.  McDaniel,  33  Iowa,  406  (4  Am.  Rep.  244); 
Iluse  V.  Flint,  ib.;  Iluse  v.  Hamblin,  ib. 

*  Monroe  v.  Haff,  5  Den.  3G0;  Soffe  v.  Gallagher,  3  E.  D.  Smith,  507; 
Shrimer  v.  Keller,  25  Pa.  St.  61.     See  Day  v.  Tliompson,  64  Ala.  269. 

*  Woods  V.  Woods,  127  Mass.  141 ;  Heath  v.  Achey,  96  Ga.  438  (23  S.  E. 
396);  Hobson  v.  Davidson,  8  Mart.  (La.)  422  (13  Am.  Dec.  294);  Jansen 
V.  Grimshaw,  125  HI.  468  (17  N.  E.  850)  Adams  v.  Squires,  61  111.  App. 
513;  Boston  Nat.  Bank  v.  Jose,  10  Wash.  185  (38  P.  1026). 

c  Phoenix  Ins.  Co.  v.  Church,  81  N.  Y.  218  (37  Am.  Rep.  494);  Mc- 
Morrau  v.  Murphy,  68  Mich.  246  (36  N.  W.  60);  Childs  v.  Pellett,  102 
Mich.  558  (61  N.  W.  54);  Morris  v.  Harvey,  75  Va.  726;  Second  Nat. 
Bank  v.  Wetzel,  151  Pa.  St.  142  (24  A.  1087);  Nichols  v.  Bate,  10 
Yerg.  429;  Compton  v.  Patterson,  28  S.  C.  115  (5  S.  E.  27C) ;  Bk  of  Com. 
V.  Letcher,  3  J.  J.  Marsh.  195;  Smith  v  Harper,  5  Cal.  329.  But  see 
Parrolt  v.  Colby,  71  N.  Y.  697;  First  Nat.  Bank  r.  Knevals,  67  Hun,  648; 
Jagger  Iron  Co.  v.  Walker,  76  N.  Y.  521,  and  f-ee  McElwee  v.  Mclropoli- 
tan  Lumber  Co.,  69  Fed.  302;  16  C.  C.  A.  232. 

503 


§    183  PAYMENT.  [CH.  XVII. 

These  presumptions  may  always  be  rebutted,  not  only 
by  proof  of  an  express  agreement  to  the  contrary ;  but, 
likewise,  by  influence  from  collateral  circumstances,  which 
seem  to  indicate  an  intention  contrary  to  the  logal  pre- 
sumption.^ 

Wherever  the  payment  by  bill  or  note  is  held  to  be  con- 
ditional, the  right  of  action  on  the  original  debt  is  sus- 
pended, until  the  bill  or  note  is  payable;  and  if  it  should 
be  dishonored  at  maturity,  the  right  of  action  on  the  origi- 
nal debt  revives,  and  the  creditor  has  his  right  of  election 
on  which  liability  to  bring  suit.  But  if  he  elects  to  sue  on 
the  original  debt,  he  must  produce  in  court,  or  satisfac- 
torily account  for  the  absence  of  the  bill  or  note,  so  that 
the  debtor  may  be  protected  from  a  subsequent  suit  on  the 
bill  or  note  by  a  bona  fide  holder  of  the  same.^ 

§  183.  Payment  by  check. —  Where  the  payment  of  a 
debt  is  made  by  a  check, —  apparently,  whether  it  be  the 
check  of  the  debtor  or  of  some  third  party, —  it  is  pre- 
sumed alwa3:s  to  be  a  conditional  payment  only,  and  be- 
comes an  absolute  payment  only  when  the  check  has  been 
paid.  And  so  strong  is  this  presumption,  that,  where  the 
debt  takes  the  form  of  a  bill,  note  or  other  instrument  of 
indebtedness,  the  holder  is  not  obliged  to  surrender  such 
instrument,  until  the  check  has  been  paid.^ 

1  Appleton  V.  Parker,  15  Gray,  173;  Amos  v.  Bennett,  125  Mass.  123; 
Shumway  v.  Reid,  34  Me.  5G0  C5(j  Am.  Dec.  G79) ;  Tobey  u.  Barber,  5 
Johns.  68  (4  Am.  Dec.  326) ;  Meyer  v.  Lathrop,  73  N.  Y.  315;  Weston  v. 
Wiley,  78  Ind.  54;  Courtney  v.  Hogan,  93  111.  101;  Jansen  v.  Grimshaw, 
125  III.  468  (17  N.  E.  850) ;  Burchard  v.  Frazer,  23  Mich.  224;  Charlotte 
Steamboat  v.  Hammond,  9  Mo.  58  (43  Am.  Dec.  536). 

2  Tobey  v.  Barber,  5  Johns.  68  (4  Am.  Dec.  326);  Cole  v.  Sachett,  1 
Hill,  516;  Harris  v.  Johnston,  3  Cranch,  311;  Matthews  v.  Dare,  20  Md. 
248;  Alcock  v.  Hopkins,  6  Cash.  484;  Beecher  v.  Dacry,  45  Mich.  92; 
Miller  v.  Lumsden,  16  111.  161;  Holmes  v.  Lykins,  50  Mo.  399. 

3  Small  V.  Franklin  Min.  Co.,  99  Mass.  277;  Smith  v.  Miller,  43  N.  Y. 
171  (3  Am.  Rep.  690);  52  N.  Y.  545;  Davison  v.  City  Bank,  57  N.  Y.  81; 
Canadian  Bank  v.  McCrea,  106  111.  281 ;  Woodbiirn  v.  Woodburn,  115111. 
427  (5  N.  E.  82) ;  Barnet  v.  Smith,  30  N.  H.  256  (64  Am,  Dec.  290)  ;  Henry 
V.  Conley,  48  Ark.  267  (3   S.  W.  181);  Phillips  v.  Bullard,  58  Ga.  256; 

504 


CH.  XVII.]  PAYMENT.  ILL.   CAS. 

And  if  an  agent  for  collection  were,  without  authority, 
to  receive  a  check  in  payment  of  a  bill  or  note,  and  sur- 
render the  bill  or  note  before  payment  of  the  check;  any 
loss,  resulting  from  the  dishonor  af  the  check,  and  his  sur- 
render of  the  1)111  or  note,  would  fall  upon  the  agent.* 
But  payment  by  check  is  so  far  an  absolute  payment, 
that,  where  it  is  given  in  payment  of  a  bill,  the  drawer  of 
the  check  cannot  countermand  it,  on  learning  of  the  insol- 
vencv  of  the  drawer  of  the  bill.^ 


ILLUSTRATIVE  CASES. 

Bay  City  Bank  v.  Lindsay,  94  Mich.  176  (54  N.  W.  42). 

Voltz  V.  National  Bank  of  Illinois,  158  111.  532  (42  N.  E.  69). 

Sampson  v.  Fox,  109  Ala.  662  (19  So.  896). 

Payment  of  Bill  by  Acceptor's  Sight  Draft  on  Drawer 
which  the  Latter  agreed  Orally  to  Fay  —  Absolute 
Payment  —  Xo  Recourse  against  Drawer  by  the  Bank 
which  Paid  the  Original  Bill  to  Holder,  on  Receipt 
of  the  Sight  Draft,  and  which  Draft  was  Subse- 
quently I>i«honored. 

Bay  City  B-i-^k  v.  Lindsay,  94  Mich.  176  (54  N.  W.  42). 

Error  to  circuit  court,  Wayne  county;  George  S.  Hosmer, 
Judge. 

Action  by  the  Bay  City  Bank  against  Arcbibald  G.  Lindsay, 
survivor,  etc.,  to  recover  the  amount  of  a  draft.  From  a  judg- 
ment for  defendant,  plaintiff  appeals.     Affirmed. 

MoNTGOMEHT,  J.     Tlic  plaintiff  declared  ou  the  common  counts, 

Turner  v.  New  Farmers'  Bk.  (Ky.  '97),  39  S.  W.  425;  Watkins  v.  Par- 
sons, 13  Kan.  426;  Jones  v.  Heiliiier,  36  Wis.  149.  If  bill  or  note  is 
surrendered,  payment  by  check  becomes  absoluti^  First  Nat.  Bk.  v. 
Maxwell,  83  Me.  576  (22  A.  479).  See  Equitable  Nat.  Bank  v.  Griffin  & 
Skelley  Co.,  113  Cal.  692  (45  P.  985). 

J  Whitney  v.  E.-^sen,  99  Mass.  308  (96  Am.  Dec.  762);  Smith  v.  Miller, 
43  N.  Y.  171  (3  Am.  Hep.  690) ;  52  N.  Y.  546;  Kathbun  v.  Citizens'  Steam- 
boat Co.,  76  N.  Y.  376;  First  Nat.  Bank  v.  Fourth  Nat.  Bk.,  89  N.  Y. 
412;  "Weyerhausen  v.  Dun,  100  N.  Y.  150;  2  N.  E.  274  (taking  a  note  in 
payment).  Certification  of  the  check  before  delivery  to  him  would  not 
change  his  liability  in  case  of  the  dishonor  of  the  check.  Bickford  v. 
First  Nat.  Bank,  42  111.  238  (89  Am.  Dec.  436);  Brown  v.  Leckie,  43  111. 
497.     Sie  Deutsche  Bank  v.  Berirs,  73  Law.  T.  66;). 

2  Equitable  Nat.  Bank  v.  Griffin  Skelley  Co.,  113  Cal.  692  (45  P.  985). 

505 


13 


^' 


ILL.  CAS.  PAYMENT.  [CH.  XVII. 

and  furnished  a  bill  of  particulars  which  limited  its  demand  to  a 
claim  for  $2,000  paid  E.  J.  Vance  &  Co.  on  December  15,  1890, 
for  the  firm  of  Lindsay  &  Gamlile,  and  at  their  request  to  take 
up  the  draft  hereinafter  referred  to.  The  other  item  in  the  bill 
is  the  liability  of  defendant  on  the  draft,  a  copy  of  which  was 
served  with  the  declaration.  The  draft  in  question  was  dated 
September  12,  1890,  was  drawn  b}'^  ttie  defendant  on  E.  J.  Vance 
&  Co.,  payable  to  the  order  of  the  drawers,  and  was  accepted  by 
E.  J.  Vance  &  Co.,  payable  at  the  Bay  City  Bank.  It  was 
indorsed  as  follows:  "  Pay  E.  W.  L^ech  &  Co.  or  order.  Lind- 
say &  Gamble,  E.  W.  Leech  &  Co.,  (in  blank,)" — and  also: 
"Pay  to  the  order  of  W.  O,  Cliff,  cashier,  for  collection,  for 
account  of  Peninsular  Savings  Bank,  Detroit,  Mich.  J.  B.  Moore, 
Cashier."  The  case  rested  upon  the  testimony  adduced  by  the 
plaintiff,  which  tended  to  show  that  the  defendant's  firm,  at  the 
date  of  the  transactions  in  question,  consisted  of  A.  G.  Lindsay 
and  Patrick  M.  Gamble,  since  deceased;  that  Gamble  was  a 
member  of  all  three  firms, —  of  Lindsay  &  Gamble,  E^  J.  Vance 
&  Co.,  and  Leech  &  Co.;  that  on  the  day  of  maturity  of  the 
draft,  it  was  presented  for  payment  at  the  Bay  City  Bank; 
that  payment  was  refused  for  the  reason  that  there  were 
no  funds  of  E.  J.  Vance  &  Co.  in  hand  to  pay  with ; 
that  during  the  day  the  attention  of  tl>e  bookkeeper  of 
E.  J.  Vance  &  Co.,  Mr.  Buits,  was  directed  to  the  sub- 
ject by  the  cishier  of  the  })laintiff.  For  a  statement  of 
what  followed,  we  quote  from  the  tistimony  given  by  Mr.  Butts  on 
the  trial:  "  I  went  to  the  bank,  and  told  Mr.  Young,  the  cashier 
of  the  Bay  City  Bank,  that  it  was  paper  that  Lindsay  &  Gamble 
should  pay,  and  lliat  I  would  have  to  make  a  draft  back  on  them 
to  pay  it  with.  Mr.  Young  said  he  would  take  a  demand  draft  or 
a  sight  draft,  if  I  would  call  up  Lindsay  &  Gamble,  and  have  Mr. 
Lindsay  say  that  he  would  take  care  of  it.  I  then  went  to  our 
office,  and  called  up  Mr.  Lindsay,  and  reminded  him  of  this 
paper  coming  due,  that  they  should  pay.  I  asked  him  if  he  would 
take  care  of  a  demand  draft,  if  I  should  make  it,  and  he  said, 
'  On  demand  is  a  pretty  short  time  ;  '  he  hardly  thought  he  would 
be  able  to  take  care  of  it.  He  asked  me  if  I  could  not  make  it 
for  a  few  days'  time.  I  tliink  he  menti  me<l  ten  days.  I  told  him 
I  hardly  thought  the  bank  would  want  to  use  a  paper  of  that 
time,  but,  if  I  could  make  it  at  sight,  that  would  give  him  three 
days*  time  to  pay  it.  '  Well,'  he  says,  '  do  the  best  j'ou  can.' 
I  then  went  to  the  bank,  and  told  the  cashier  that  Lindsay  & 
Gamble  would  take  care  of  a  siglit  draft.  The  bunk  officer  said, 
*■  All  right ;  '  that  they  would  take  it  in  paj'ment  of  this  pai)er. 
Question:  That  paid  the  paper?  Answer:  Yes,  sir."  Tiie  cir- 
cuit judge  directed  a  verdict  for  defendant,  and  plaintiff  brings 
error. 

It  is  first  insisted  that  the  draft  should  not  be  treated  as  paid, 
but  should  be  held  good  in  the  hands  of  the  bank;  and  it  is 
claimed  that  the  case  falls  within  that  class  in  which  it  is  held 

506 


CH.  XVII.]  PAYMENT.  ILL.   CAS. 

that  payment  by  an  indorser  or  other  party  to  commercial  paper, 
who,  as  between  himself  and  the  other  parties  to  such  paper, 
stands  in  the  position  of  surety,  does  not  necessarily  render  the 
paper  functus  officio,  but  that  it  may  be  again  put  afloat  by  the 
indorser.  Daniel  Neg.  Inst.  1230,  and  cases  cited.  We  think, 
however,  the  testimony  in  this  case  does  not  show  an  attempt  on 
the  part  of  Vance  &  Co.  to  so  treat  this  paper.  This  draft, 
when  presented,  had  a  limited  indorsement,  and  the  undoubted 
intention  on  the  part  of  Vance  &  Co.  was  to  pay  and  retire  it, 
and  the  bank,  in  terms,  accepted  a  sight  draft,  and  agreed  to 
make  payment,  and  did  in  fact  make  payment.  There  was  no 
intention  on  part  of  eitlier  Vance  &  Co.  or  the  officers  of  the  bank 
that  title  should  vest  in  the  plaintiff.  This  is  made  to  further 
conclusively  appear  by  the  fact  that  the  bank  charged  the  amount 
of  the  draft  in  question  to  the  account  of  Vance  &  Co.  and 
credited  the  proceeds  of  the  sight  draft,  and  afterwards  fixed 
the  liability  of  Vance  &  Co.  by  protesting  the  sight  draft.  It  is 
unnecessary,  therefore,  to  decide  whether  Vance  &  Co.  had  the 
right  to  reissue  the  draft  after  payment  by  them,  as  no  attempt 
to  do  so  is  shown.  The  circuit  judge  was  right  in  holding  that 
the  draft  was  paid,  and  that  no  recovery  could  be  had  thereon. 
2.  The  question  of  defendant's  liability,  under  the  money 
count,  for  money  i)aid  for  his  use,  is  more  difficult  of  determina- 
tion. The  plaintiff's  contention  is  that  the  transaction  amounted 
to  a  payment  by  the  bank  of  $2,000  upon  a  demand  upon  which 
the  defendant  was  liable  previously,  and  which  it  was  the  defend- 
ant's duty  to  pay,  and  which  the  bank  did  in  fact  pay  at  his  re- 
quest; and  it  is  said  that  the  fact  that  the  defendant  agreed  to 
accept  a  draft  for  the  amount,  and  that  such  agreement  is  void 
under  How.  St.,  §  1583,  does  not  change  the  relations  of  tlie  par- 
ties ;  that  the  right  of  action  was  complete  when  the  money  was 
advanced.  There  is  much  force  in  this  contention.  Indeed,  it 
seems  to  us  unanswerable,  if  it  can  be  held  that  the  transaction  in 
question  established  any  privity  between  the  defendant  and  the 
bank.  But  a  careful  examination  of  the  testimony  discloses  the 
fact  that  the  defendant  did  not  authorize  Butts  to  speak  for  him. 
There  is  nothing  in  Butts'  testimony  which  disclosis  that  he  was 
directed  to  ask  any  other  than  Vance  and  Co.  to  make  payment 
of  this  draft.  The  testimony  further  shows  that  th^;  plaintiff  in 
fact  accepted  the  sight  draft  of  Vance  &  Co.  on  defendant,  and 
credited  this  to  the  account  of  Vance  &  Co.,  and  charged  the 
time  draft  to  him.  Vance  &  Cd.  were  liable  t(i  tiie  bank,  and  the 
defendant  was  liable  to  Vance  &  Co.  There  is,  thcrefi>re,  this  ad- 
ditional difficulty  standing  in  the  way  of  plaintiff's  recovery  here  : 
Not  only  was  the  agreement  to  accept  oral,  but  it  was  made  to 
Vance  &  Co.,  and  no  authority  to  bind  defendant  was  given,  ex- 
cept an  oral  promise  to  accept  the  sight  draft.  It  follows  that 
there  was  no  such  privity  of  contract  between  the  plaintiff  and 
defendant  as  entitles  the  plaintiff  to  recover.  Judgment  is 
affirmed,  with  costs.     The  other  justices  concurred. 

507 


ILL.   CAS.  PAYMENT.  [CH.  XVII. 


Payment  of    Checks  Tlirougli  Cleai'ing  House  Agent  — 
Conditional  —  and  Gives  Agent  Rights  of  Indorser. 

Voltz  V.  Natioual  Biak  of  Illiaois,  158  Id.  532  (42  N.  E,  69). 

Appeal  from  appellate  court,  First  district. 

Assumpsit  by  the  National  Bauk  of  Illinois  against  Fred  L. 
Voltz  and  Albert  Lang,  copartners  as  Fred  L.  Voltz  &  Co. 
Plaintiff  obtained  judgment,  which  was  affirmed  l:)y  the  appellate 
court.     57  III.  App.  360.     Defendants  ap[)eal.     Affirmed. 

This  cause  is  l)rought  to  this  court  by  appeal  on  a  certificate  of 
importance  from  the  appellate  court  of  the  First  district.  On 
and  for  some  time  prior  to  June  3,  1893,  there  was  in  the  city  of 
Chicago  an  association  known  as  the  Chicago  Clearing  House. 
The  membership  of  that  association  comi^rised  certain  of  the 
•Chicago  banks,  and  its  purpose  was  to  facilitate  tlie  daily  settle- 
ment between  those  banks.  The  National  Bank  of  Illinois, 
appellee,  and  the  First  National  Bank  of  Chicago,  were  both 
members  of  that  association.  On  and  for  some  time  prior  to 
June  2,  1893,  Hermann  Schaffner  &  Co.  were  engaged  in  bus- 
iness as  private  bankers  in  the  city  of  Chicago.  They  were  not 
in  the  clearing-house  association,  but  through  an  arrangement 
between  them  and,  appellee  checks  drawn  upon  the  former  were 
cleared  by  the  latter.  In  order  to  make  this  arrangement 
effective,  so  that  checks  drawn  upon  Hermann  Schaffner  &  Co., 
and  certified,  would  be  received  by  the  clearing-house  banks,  it 
became  necessary  for  appellee  to  guaranty  tlie  payment  of  such 
checks.  On  June  2,  1893,  the  First  National  Bank  held  for  col- 
lection a  draft  for  $581.03,  drawn  on  appellants,  F.  L.  Voltz  & 
Co.,  and  Vjy  them  accepted.  On  that  day  appellants,  who  then 
had  funds  on  general  deposit  with  Hermann  Schaffner  &  Co., 
drew  a  check  upon  tlie  latter  for  the  sum  of  $581.03,  had  it  certi- 
fied, and  delivered  it  to  the  First  Naiional  Bauk  in  payment  of 
the  draft.  That  check  was  received  by  tlie  First  National  Bank 
between  11  and  12  o'clock  on  June  2d,  and  too  late  to  be  put 
through  the  clearing  house  on  that  da3%  At  about  8  :30  a.  m. 
of  June  3,  1893,  Hermann  Schaffner  &  Co.  made  a  voluntary 
assignment  for  the  benefit  of  their  creditors.  They  then  ceased 
doing  business,  and  are  still  insolvent.  On  June  3,  1893,  the 
First  National  Bank  presented  said  check  through  the  clearing 
house  to  the  National  Bank  of  Illinois.  The  payment  of  it  was 
refused  on  account  of  the  insolvency  of  Hermann  Schaffner  & 
Co.  The  cashier  of  the  First  National  thereupon  called  the 
attention  of  appellee  to  the  guaranty  in  evidence,  and  thereupon 
appellee  issued  its  cashier's  check  for  the  amount,  and  the  check 
in  suit  was  indorsed  "  Without  i-ecourse,"  by  the  First  National 
Bank,  and  delivered  to  appellee.  The  amount  of  the  check  was 
charged  by  appellee  as  an  overdraft  of  Herman  Schaffner  &  Co.'s 
account,  and  it  subsequently  filed  a  claim  for  the  amount  so  paid 
508 


CH.  XVII.]  PAYMENT.  ILL.  CAS. 

against  the  estate  of  Hermann  Schaffner  &  Co.    The  following  is 
a  copy  of  the  check  as  it  was  offered  in  evidence : — 

"  No.  1,070.  Chicago,  June  2<1,  1893.  To  Hermann  Schaffner 
&  Co.,  Bankers:  Pay  to  the  order  of  the  First  National  $r)81yO„% 
(five  hundred  eighty-one  and  ^Vo  dollars).     F.  L.  Voltz  &  Co." 

"  Certified  June  "2nd,  1893.  Hermann  Schaffner  &  Co.  A. 
Swartz,  Teller." 

Indorsed  on  back:  "  First  National  Bank.  Without  recourse. 
R.  J.  Street,  Cash." 

"Pay  throngh  Chicaso  Clearing  House  onlv. 

"Paid  June  3rd,  1893." 

The  indorsement,  "  Paid  June  3rd,  1893,"  is  the  clearing-house 
stamp,  put  there  on  June  2d,  and  dated  a  da}^  ahead  by  tlie  First 
National  Bank  in  anticipation  of  payment  through  the  clearing  of 
the  next  day,  as  was  the  usage  among  the  members  of  the 
clearinghouse. 

The  following  is  a  copy  of  the  guaranty  given  by  appellee  to 
the  First  National  Bank  :  — 

"  Chicago,  Feb.  3rd,  1886.  L.  J.  Gage,  Esq.,  Vice-President, 
City — Dear  Sir:  This  bank  hereby  holds  itself  accountable  for 
payment  on  presentation  in  the  regular  course  to  it  of  any  and 
all  checks  or  drafts  drawn  apon  the  banks  and  bankers  below 
named,  or  either  of  them,  and  properly  certified  by  them.  This 
obligation,  however,  to  apply  only  to  such  drafts  and  checks  as 
may  be  received  by  you  in  ithe  course  of  your  business  in  pay- 
ment of  collections  or  discounted  items.     »     *     * 

"  Hermann  Schaffner  &  Co. 

"  Truly  yours, 

"  \\yi.  A.  Hammond,  Cashier." 

The  suit  is  assumpsit  by  api)ellee,  as  assignee  of  the  check, 
against  appellants,  as  makers.  The  declaration  also  contains  the 
common  counts.  The  issues  joined  were  submitted  to  the  cir- 
cuit court  without  a  jury,  and  the  finding  and  the  judgment  were 
for  appellee  for  $007.66  damages.  And  thereafter  the  judgment 
was  alfirmed  in  the  appellate  court. 

At  the  trial,  appellants  submitted  certain  written  propositions, 
to  be  held  as  law.  The  court  held  proposition  1,  as  follows: 
"(l)Thc  court  finds  as  a  matter  of  law  that  the  relationship 
between  Hermann  Schaffner  &  Co.  and  the  plaintiff  herein,  where- 
by the  latter  represented  tiie  former  in  the  clearing  house  in  the 
city  of  Chicago,  was  that  of  principal  and  agent."  But  the  court 
refused  to  hold  propositions  from  2  to  9,  inclusive,  which  were 
as  follows:  "  (2)  The  court  finds  as  a  matter  of  law  that  the 
plaintiff  herein  came  into  possession  of  the  check  sued  on  herein 
for  and  as  the  agent  of  Hermann  Schaffner  &  Co.,  and  that  the 
payment  made  therefor  by  it  to  the  First  National  Bank  was  in 
law  a  payment  by  Ileimann  Schaffner  &  Co.,  and  an  extinguish- 
ment of  the  drawc  r's  liability.  (3)  The  court  finds  as  a  matter  of 
law  that,  as  the  National  Bank  of  Illinois  was  not  liable  upon  its 
gnarantv  to  the  First  National  Bank,  the  payment  by  it  was  made 

5oy 


ILL.   CAS.  PAYMENT.  [CH.  XVII. 

as  volunteer,  and  it  is  not  entitled  to  he  subrogated  as  against 
the  defendants  to  the  rights  of  the  First  National  Bank.  (4) 
The  court  finds  as  a  matter  of  law  that  the  contract  executed  by 
the  National  Bank  of  Illinois  in  1886  was  ultra  vires  and  void, 
and  that  the  First  National  Bank  could  not  have  maintained  any 
recovery  thereon  for  the  check  in  question.  (5)  The  court  finds 
as  a  matter  of  law  that  the  contract  of  guaranty  executed  by  the 
National  Bank  of  Illinois  to  the  First  National  Bank  in  1886  is 
void,  as  rendering  the  National  Bank  of  Illinois  liable  for  an 
amount  in  excess  of  the  capital  stock  of  the  company  actually 
paid  in,  and  tliat  the  First  National  Bank  could  not  have  main- 
tained any  action  thereon  for  the  recovery  of  the  amount  of  the 
check  in  suit.  (6)  The  court  finds  as  a  matter  of  law  that  the 
contract  of  guaranty  executed  by  the  National  Bank  of  Illinois 
to  the  First  National  Bank  in  1886  is  void,  as  being  against  public 
policy ;  and  that  the  First  National  Bank  could  not  have  main- 
tained any  action  thereon  for  the  recovery  of  the  amount  of  the 
check  in  suit.  (7)  The  court  finds  as  a  matter  of  law  that  the 
defendants  are  not  liable  to  tlie  plaintiff  upon  the  check  sued  on 
herein.  (8)  The  court  finds  as  a  matter  of  law  that  the  First 
National  Bank  was  bound  to  know  the  ultra  vires  character 
of  the  contract  of  guaranty  executed  to  it  by  the  National  Bank 
of  Illinois  in  1886  by  reason  of  itself  being  a  national  bank. 
(9)  The  court  finds  as  a  matter  of  law  that  Hermann  Schaffner 
&  Co.  would  have  no  right  of  action  upon  the  check  in  question  if 
it  had  paid  it,  and  that  the  National  Bank  of  Illinois  cannot,  by 
virtue  of  the  payments  made  by  it  in  the  course  of  its  agency  for 
Hermann  Schaflfner  &  Co.,  acquire  any  greater  rights  as  against 
the  defendants  herein  than  Hermann  Schaffner  &  Co.  would  have 
had  had  such  payment  been  made  by  them." 

Baker,  J.  (after  stating  the  facts).  There  was  no  real  incon- 
sistency in  the  rulings  of  the  trial  court  upon  the  written  proposi- 
tions submitted  to  it  in  holding  proposition  1,  and  refusing  to 
hold  propositions  2,  7,  and  9  as  law  in  the  decision  of  the  case. 
Assuming  it  to  be  true  that,  while  appellee  represented  Hermann 
Schaffner  &  Co.  in  the  clearing  house,  the  relation  that  existed 
between  them  was  that  of  principal  and  agent,  yet  that  relation 
ceased  to  exist  early  on  the  morning  of  June  3,  1893,  when  Hei- 
maun  Schaffner  &  Co.  made  a  general  assignment  for  the  benefit 
of  their  creditors,  and  ceased  doing  business,  and  appellee  refused 
longer  to  represent  them  in  the  clearing  house,  and  threw  out  and 
returned  their  clearings,  amounting  to  S6, 976. 01.  The  evidence 
is  that  in  the  forenoon  of  June  3d  appellee  refused  longer  to  pay 
checks  certified  by  them  and  that  the  check  in  question  was  not  paid 
through  the  clearing  house.  The  testimony  of  Mr.  Moll,  who  was 
assistant  cashier  of  appellee,  is  explicit  that  the  check  was  paid 
by  appellee  on  account  of  the  guaranty  in  writing  held  by 
the  First  National  Bank.  And  Mr.  Street,  cashier  of  the 
First  National  Bank,  testifies  in  chief:  "This  check  was  shown 
to  me  by  our  note  teller,  and  I  remembered  the  fact  that  we  had 

510 


CH.  XVII.]  PAYMENT.  ILL.  CAS. 

a  guaranty  from  the  National  Bank  of  Illinois,  and  I  held  them  to 
their  guaranty  simply,  and  they  took  the  check  up."  And  testi- 
fies on  cross-cxnmination :  "When  that  check  was  not  paid 
through  the  clearing  hcjuso,  our  bank,  eiiher  on  June  3d,  or  June 
5lli,  demanded  that  the  N:Uional  Bank  of  Illinois  should  give  us 
the  face  of  it."  And  also  says  that  he  indorsed  the  check  by 
way  of  transfer  to  the  National  Bank  of  Illinois,  but  to  protect 
his  own  bank,  made  the  indorsement  "  without  recourse."  In 
holding  proposition  1  the  trial  court  did  not,  either  in  terras  or 
by  necessary  implication,  find  as  matter  of  fact  that  appellee,  in 
paying  the  check,  did  so  as  agtnt  of  Hei maun  Schaffner  &  Co.  ; 
and  when  that  proposition  is  read  in  the  light  of  the  refusal  to 
hold  propositions  2,  7,  and  9,  it  is  mnniftst  that  court  must  have 
found  that  appellee  did  not  pay  or  come  into  possession  of  the 
check  "for  and  as  the  agent"  of  Hermann  iSchaffner  &  Co. 
Therefore  the  doctrine  that  payment  by  the  agent  of  the  maker  of 
a  note  or  drawee  and  acceptor  of  a  check  is  a  payment  of  the  note 
or  check,  and  an  extinguishment  of  the  lialiility  of  the  indorser 
of  such  note  or  drawer  of  such  check,  has  no  apiilication  to  the 
case ;  and  the  authorities  cited  Dy  appellants  upon  this  branch  of 
the  controversy —  i.  e.  Mechem  Ag.,  §  487  ;  Burton  v.  Slaughter, 
26  Grat.  914;  and  Johnson  v.  Glover,  121111.  28;3;  12  N.  E. 
257  —  are  not  in  point.  In  our  op  nion,  the  coiiclubion  here  must 
be  that,  when  appellee  gave  to  the  First  National  Bank  the  cashier's 
check  for  the  face  of  the  F.  L.  Voltz  &  Co.  cheek,  and  took  an 
assignment  of  the  latter  (heck,  it  did  so,  not  as  the  agent  of 
Hermann  Schaffner  &  Co.,  but  as  guarantor  of  said  check.  And 
it  follows,  since  appellee  did  not  pay  the  check  as  agent,  that  by 
the  indorsement  it  took  the  legal  title  to  the  check,  and  has  a 
legal  right,  as  assignee,  to  recover  the  money  therein  specified 
from  appellants,  the  drawers  of  the  check,  the  said  Hermann 
Schaffner  &  Co.  having  failed  and  refused  to  make  payment;  and 
this  wholly  regardless  of  the  considerations  that  may  have 
induced  it  to  make  the  pa3'ment  and  take  the  assignment.  Ap- 
pellants, the  drawers,  procured  the  certification  of  the  check 
prior  to  its  delivery  to  the  payee,  and  they  are  primarily  liable 
to  such  payee  or  its  assignee.  Bank  v.  Jones,  137  111.  634,  27 
N.  E.  533;  Brown  v.  Leckis,  43  111.  497;  Bickford  v.  Bank,  42 
III.  238  ;  Rounds  v.  Smith,  Id.  245. 

It  is  claimed  in  some  of  tiie  refused  propositions  that  were 
submitted  to  the  court,  and  also  in  the  argument  of  appellants, 
that  the  contract  of  guaranty  given  b}'  appellee  to  the  First 
National  Bank  was  ultra  vires  and  void  ;  that  it  was  also  void  as 
ren<lering  appelhe  liable  for  an  amount  in  excess  of  its  capital 
stock  actually  paid  in,  and  void  as  being  against  public  policy  ; 
and  tiiat,  thirefore,  the  First  National  Bank  could  not  have  main- 
tained any  action  thereon  against  api)ellee  for  the  recovery  of  the 
amount  of  the  check  in  suit,  and,  consequently,  the  payment 
made  by  appellee  was  made  as  a  volunteer,  and  it  is  not  entitled 
to  be  subrogated,  as  against  appellants,  to  the  rights  of  the  First 

511 


ILL.   CAS.  PAYMENT.  [CH.  XVII. 

National  Bank.  Even  if  all  these  claims  should  be  conceded,  yet, 
if  we  were  right  in  the  conclusions  we  have  announced  above, 
appellee,  as  assignee  of  the  check,  has  a  compifte  legal  right  of 
recovery,  and  it  is  wholly  immaterial  even  if  he  has  not  the 
equitable  right  to  be  subrogated  to  the  position  of  the  First 
National  Bank. 

But  the  determination  of  the  question  whether  the  guaranty 
contract  is  ultra  vires  and  void,  or  void  as  being  otherwise  con- 
trary to  the  statute  under  which  appellee  was  organized,  or  against 
public  policy,  depends  upcn  the  interpretation  tiiat  is  to  be  placed 
upon  the  national  bank  act,  and  the  effect  to  be  given  its  pro- 
visions. It  may  be  that,  if  a  statute  of  this  State  was  involved, 
then  the  rule  that  no  right  of  action  can  spring  out  of  an  illegal 
contract,  held  in  Penn  v.  Bornman,  102  111.  523,  and  in  other 
cases,  would  apply.  But  in  the  very  case  just  cited  the  para- 
mount authority  of  the  Supreme  Court  of  the  United  States  to 
construe  all  Federal  statutes,  including  the  national  bank  act,  is 
fully  conceded.  The  doctrine  of  the  Federal  courts,  as  applied 
to  this  case,  is  that,  even  if  tlie  guaranty  which  appellee  gave  to 
the  First  National  Bank  was  ultra  vires,  as  given  in  viola' ion  of 
the  national  bank  act,  yet  appellee  could  not  urge  that  defense 
after  the  First  National  Bank,  in  reliance  upon  that  guaranty, 
had  taken  the  certified  check  in  payment  of  the  acceptance  of  F. 
L.  Voltz  &  Co.  ;  and  that  the  power  to  redress  the  wrong  com- 
mitted by  the  appellee  bank  was  in  the  government  only,  by  a 
proceeding  to  forfeit  the  charter  of  the  bank.  Bank  v.  Matthews, 
98  U.  S.  621;  Bank  v.  Whitney,  103  U.  S.  99;  Wel)er  v.  Bank, 
12  C.  C.  A.  93;  G4  P\d.  208.  It  would  seem  that  under  the 
decisions  of  the  Federal  courts  appellee  could  not  have  availed 
itself  of  the  defense  of  ultra  vires  in  an  action  brought  on  the 
guaranty.  But,  even  if  it  could  have  done  so,  it  did  not,  but 
paid  the  check  in  accordance  with  its  guaranty  ;  and  the  question 
of  the  validity  of  such  guaranty  was  one  in  which  appellants 
had  no  interest,  and  it  is  a  matter  of  indifference  to  them 
whether  they  pay  the  First  National  Bank  or  appellee  ;  and  there- 
fore they  cannot  be  heard  to  say  that  appellee  shall  not  have  the 
benefit  of  the  doctrine  of  subrogation.  Slack  v.  Kirk,  67  Pa.  St. 
380;  2  Morse  Banks,  §  723.  Here  the  guaranty  was  not  indorsed 
on  the  check,  but  was  written  on  a  se[)arate  paper,  and  that  paper 
was  addressed  only  to  the  First  Nation a^  Bank  ;  and  upon  the 
face  of  the  guaranty  there  was  an  express  restriction  that  the 
obligation  assumed  should  "  apply  only  to  such  drafts  and  checks 
as  may  be  received  by  you  in  the  course  of  your  business  in  pay- 
ment of  collections  or  discounted  items."  And  the  rule  is  that 
a  guaranty  so  given  and  addressed  to  a  particular  person  or  coi'- 
poration  only  is  not  negotiable,  and  is  a  mere  personal  contract. 
2  Daniel  Neg.  Inst.,  §  1774.  And  it  results  from  this  rule  that 
appellants,  the  drawers  of  the  check,  are  total  strangers  to  this 
contract  of  guaranty,  and  it  does  not  inure  to  their  benefit,  or 
invest  them  with  any  right. 
512 


CH.  XVII.]  PAYMENT.  ILL.   CAS. 

Appellee,  being  legally  liable,  or,  at  the  very  least,  under  moral 
obligations  for  the  payment  of  the  certified  check  to  the  First 
National  Bank,  it  cannot  be  said  that  it  was  a  mere  volunteer 
when  it  paid  the  money  and  took  up  the  check.  A  person  who, 
though  not  obliged  to  do  an  act,  yet  has  an  interest  in  doing  it,  is 
not  to  be  regarded  as  necessarily  and  simply  a  volunteer.  Wright 
V.  Railway  Co.,  1  Q.  B.  Div.  252;  Holmes  r.  Railway  Co.,  L. 
R.  4  Exch.  254;  L,  R.  6  Exch.  123.  And  where  one  guaranties 
payment  of  a  note  or  check,  and  on  default  of  payment  by  the 
principal  debtor  pays  the  same  to  the  holder,  the  law  will  imply 
a  promise  to  repay  on  the  part  of  the  persons  primarily  liable, 
and  the  guarantor  will  be  subrogated  to  the  rights  of  the  holder 
to  whom  he  makes  payment,  and  may  maintain  assumpsit  against 
such  persons.  Babcock  v.  Blancliard,  86  Jll.  165;  Hamilton  v. 
Johnston,  82  111.  39;  Sheld.  Subr.  (2(1  Ed.),  P-  285,  §  186. 

We  think  there  was  no  substantial  error  in  the  rulings  of  the 
circuit  court  upon  the  written  propositions  that  were  submitted 
to  it.  Tlie  judgment  of  affirmance  rendered  by  the  appellate 
court  is  affirmed.     Affirmed. 


What  Constitutes  Payment  —  Presumption  of  Paj-ment 
in  Assumption  of  Debts  of  an  Old  Corporation  by  a 
New  Corporation. 

Sampson  v.  Fox,  109  Ala.  662  (19  So.  896). 

Bakewell,  C.  J.  The  action  is  founded  on  two  promissory 
notes,  made  by  appellee,  payable  to  the  order  of  Hinton  E.  Carr, 
at  the  Tuscumbia  Banking  Company,  Tuscumbia,  Ala. —  tlie  one 
of  date  September  5,  1892,  for  the  payment  of  $100,  30  days 
after  date;  the  other  of  like  tenor,  of  date  November  28,  1892, 
for  the  payment  of  S306,  sixty  days  after  date.  The  first  note 
contains  a  clause  in  these  words,  after  the  words  "value  re- 
ceived :"  "  Having  deposited  or  pledged  as  collateral  for  the  })a3'- 
raent  of  this  note  pledging  as  collateral  security  for  same,  my 
account  against  Tuscuml)ia  Electric  Light  &  Water  Company, 
showing  a  balance  due  of  $409.22.  And  I  hereby  give  to  the 
holder  full  power  and  authority  to  sell  or  collect,  at  my  expense, 
all  or  any  portion  thereof,  at  any  place,  either  in  the  city  of  Tus- 
cumbia or  elsewhere,  at  public  or  private  sale,  at  his  option,  on 
noni)erforraance  of  above  promise,  and  at  any  time  thereafter, 
and  without  advertising  the  same,  or  otherwise,  giving  five  days 
notice,  in  case  of  public  sale.  The  holder  may  purchase  without 
being  lialtle  to  account  for  more  than  the  net  proceeds  of  sale." 
The  second  note  contains  a  clause  in  all  respects  similar,  except 
that  the  collateral  is  described  as  "  all  of  my  claim  against  the 
old  Electric  Light  &  Water  Company."  The  defendant  ])leaded 
the  general  issue,  nil  debet,  and  four  special  pleas.  The  first 
special  plea  was  payment  to  Carr,  at  maturit}'  of  notes,  and  be- 

33  513 


ILL.   CAS.  PAYMENT.  [CH.  XVII. 

fore  they  were  transferred  to  plaintiff.  The  second  was  of  pay- 
ment by  the  transfer  of  the  collateral  to  Carr  on  the  maturity  of 
the  notes.  The  third  and  fourth  purport  to  be  pleas  of  set  off, 
and  in  substance  allege  the  transfer  and  pledge  of  the  collateral, 
the  negligence  of  Carr  and  of  the  banking  company  in  its  collec- 
tion, whereby  the  same  was  lost  to  the  defendant.  The  issues 
were,  by  the  consent  of  the  parties,  tried  by  the  court  without  the 
intervention  of  a  jury.  The  plaintiff  read  the  notes  in  evidence, 
and  proved  that  they  belonged  to  and  were  assets  of  the  Tuscum- 
bia  Banking  Company,  a  partneiship  composed  of  Hinton  E. 
Carr  and  Emma  Carr,  which  faded  on  the  8th  day  of  June,  1893, 
and  on  the  10th  of  June,  1893,  made  to  the  plaintiff  a  general  as- 
signment of  all  its  assets.  The  plaintiff  produced  the  collateral  in 
court  and  offered  to  surrender  it.  The  collateral  were  accounts 
due  from  the  Electric  Light  &  Water  Company,  a  corporation  ; 
and  plaintiff  proved  that  on  the  20th  of  September,  1892,  the  said 
corporation  sold  and  transferred  all  of  its  property  to  a  new  com- 
pany, called  the  Tuscurabia  Water  Company,  and  thereafter  the 
former  company  ceased  to  exist.  The  defendant  was  examined 
by  deposition  in  his  own  behalf,  and  testified  that,  when  the  first 
note  was  made,  Carr,  who  was  president  of  the  Tuscumbia  Ice 
Factory,  and  also  of  the  Tuscumbia  Banking  Company,  said  to 
him  that  there  would  be  a  consolidation  of  the  Tuscumbia  Light 
&  Water  Company,  and  the  Tuscumbia  Ice  Factory.  At  that 
time  he  got  from  Ross,  the  treasurer  of  the  Electric  Light  & 
Water  Company,  a  statement  of  the  amount  due  him  from  the 
company,  carried  it  to  Carr,  and  on  ib  as  collateral  Carr  loaned  him 
$100.  In  the  following  November  he  borrowed  from  Carr  $300  ; 
"  or,  in  other  words,  he  gave  me  $300,  and  I  assigned  him  over 
my  claim  for  $400,  or  maybe  a  little  over  $400,  on  the  Tuscumbia 
Water  Company,  Consolidated,  and  Mr.  Carr  told  me  to  assign 
him  my  claim,  and  in  30  days  he  would  have  the  bonds  of  the  Con- 
solidated company  sold,  and  have  the  money,  and  he  would  then 
cancel  my  notes,  and  send  them  to  me.  He  took  my  claim  in  pay- 
ment of  my  two  notes  to  the  bank."  P^urther  he  testified  :  "Imade 
the  transfer  of  my  claim  against  the  Tuscumbia  Light  &  Water 
Company  to  the  banking  company  (H.  E.  Carr),  at  the  time  and 
date,  simultaneously  with  the  date  of  my  last  note  of  $300  to  the 
bank  and  delivery  to  me  of  the  money,  at  which  time  he  agreed 
to  take  the  claim  and  pay  mj^  two  notes."  Further,  he  testified : 
"Then  after,  or  about  two  or  three  months  afterwards,  I  had  a 
conversation  with  Mr.  H.  E.  Carr,  at  the  bank.  I  asked 
him  if  he  had  ever  sold  the  bonds ;  that  I  did  not  want  the 
interest  on  the  two  notes  to  be  accumulating  against  me.  He 
then  said  to  me,  'You  need  not  give  yourself  any  uneasiness,' 
as  my  claim  that  I  had  transferred  to  him  was  quite  sufficient, 
and  he  would  and  had  taken  that  in  payment  of  my  two  notes  to 
the  bank."  Further,  he  testified:  "  H.  E.  Carr  was  president 
of  the  Tuscumbia  Banking  Company.  He  was  president,  super- 
intendeiit,  and  general  manager  of  the  Tuscumbia  Water  Com- 

514 


CH.  XVII.]  PAYMENT.  ILL.   CAS. 

pany  ;  and  he  said  they  (the  two  companies)  would  be  consolidated 
in  a  few  days.  He  said  be  owned  two-tliirds  of  the  Tuscum- 
bia  Water  Company,  and  he  wanted  enough  claims  and  stock  to 
continue  him  in  tlie  control  of  the  consolidated  company  ;  and  in 
the  consolidation  or  agreement  of  consolidation,  he  had  agreed  to 
pay  my  claim,  and  the  claim  of  Thompson  &  Houston  Company,  of 
Atlanta,  Ga.  He  had  given  his  individual  notes  for  the  Thompson 
&  Houston  Company  anil  (if  notmistaket))  ray  claim.'.'  Hefurtlic-r 
testified  that  neither  the  bank  nor  its  officers  had  returned  or 
offered  to  return  his  claim  against  the  Tuscurabia  Light  &  ^Yatcr 
Company  ;  that  it  could  have  l)een  collected  by  the  u=;e  of  due 
diligence  ;  that  the  company,  at  tiie  time  the  notes  fell  due,  was 
solvent.  R.  L.  Ross,  a  witness  for  defendant,  testified  that  the 
Tuscurabia  Water  Company  w;is  formed  as  ii  corporation  the 
18th  or  20th  September,  1892.  The  P^lectric  L^ght  &  Water  Com- 
pany owed  tlie  defendant  about  SiOO,  and  owned  the  electric 
light  plant  and  arc  lights,  and  had  a  franchise  for  a  water  com- 
pany. It  soM  all  of  its  property  to  the  Tuscumbia  Water  Com- 
pany, and  had  no  property  of  any  kind  left.  Carr  was  not  a 
stockholder  in  the  Electric  Light  &  Water  Company,  nor  was  the 
Tuscuml)ia  Banking  Company.  He  was  the  principal  stockholder 
in  the  Tuscumbia  Water  Company,  and  made  an  offer  to  buy  all 
the  property  of  the  Electric  Light  &  Water  Company,  and  the 
property  was  sold,  about  the  18th  or  20th  of  September,  1892  ; 
the  water  company  assuming  to  pay  tlie  debts  (including  the  debt 
due  the  defendant)  of  the  Electric  Light  &  Water  Company,  the 
company  then  owing  about  $3,500.  The  property  of  the  water 
company  cannot  be  sold  for  more  than  $4,000.  Charles  Worable, 
a  witness  for  defendant,  testified  that  he  was  secretary,  treasurer, 
und  general  manager  of  the  Tuscuml)ia  Water  Company,  of 
which  Carr  is  the  president  and  principal  stockholder ;  that  the 
water  com|)any  has  not  paid,  as  it  assumed  to  pay,  any  of 
the  debts  of  the  electric  light  company;  that  it  owes,  in  addi- 
tion, $1,500  or  $1,G00,  "  and  its  bonds,  to  the  amount  of  S7,000, 
are  out  and  in  the  hands  of  Armstrong,  cashier  of  a  bank  at 
Memphis,  and  there  is  a  mortgage  on  its  property  to  the  amount 
of  $25,000."  Carr,  as  a  witnossfor  the  plaintiff,  testified  that  he 
had  not,  nor  had  theTuscunibia  B:inkingCom|)any,  ever  collected 
any  part  of  the  collateral  mentioned  in  the  notes;  that  he  made 
no  agreement  with  respect  to  the  collateral,  except  that  started 
in  the  notes;  that  he  liad  never  said  to  the  defendant  to  assign 
him  the  collateral,  and  in  30  days  he  would  have  the  bonds  of  the 
consolidated  company  sold,  and  have  tlie  money,  and  he  would 
then  cancel  the  notes,  and  send  them  to  the  defendant ;  that  he 
did  not  take  the  collateral  in  payment  of  the  notes ;  that  it  was 
taken  as  collateral  secnrity,  an<l  has  not  been  paid;  that,  except 
as  shown  in  the  notes,  there  was  no  transfer  of  the  collateral  to 
him,  or  to  the  banking  company  ;  that  he  made  no  agreement 
with  the  defendant  to  take  the  collateral  and  pay  the  notes  for 
the  banking  com[)any  ;  that  he  did  not  have,  with  the  defendant, 

515 


ILL.  CAS.  PAYMENT.  [CH.  XVII. 

any  of  the  conversations  to  which  he  testifies ;  that  the  collateral 
had  not  been  taken,  or  agreed  to  be  taken,  in  paj-ment  of  the 
notes.  The  plaintiff,  as  a  witness,  testified  that,  since  the  col- 
lateral came  to  his  hands,  no  part  thereof  had  been  collected  ; 
that  the  Electric  Light  &  Water  Company,  within  his  knowledge, 
had  not  had  any  property  since  the  sale  in  1892  to  the  water 
company.  This  was  all  the  evidence.  The  bill  of  exceptions 
recites,  as  the  findings  and  judgment  of  the  court,  that  "  the 
court  held  and  decided  that,  as  Hinton  E.  Carr,  one  of  the  part- 
ners in  the  Tuscumbia  Banking  Company,  was  president  of  the 
Tuscumbia  Water  Company,  and  its  principal  stockholder,  which 
company  had  assumed  to  pay  all  the  debts  of  the  Electric  Light 
&  Water  Company,  the  law  presumed  tliat  the  debt  due  from  the 
Electric  Light  &  Water  Company  had  been  paid.  *  *  *  Xhe 
court  further  ruled  that  the  presumed  payment  of  the  collateral 
paid  the  notes  sued  on,  and  that  plaintiff  could  not  recover." 
Thereupon  the  court  rendered  judgment  for  the  defendant,  from 
which  the  api)eal  is  taken. 

We  cannot  assent  to  the  theory  upon  which  the  court  below 
based  the  judgment.  The  promise  or  obligation  of  the  Tuscum- 
bia Water  Company  to  pay  the  debts  of  the  Electric  Light  & 
Water  Corapan3',  as  matter  of  fact  or  of  law,  laised  no  presump- 
tion of  their  payment.  It  created  a  duty,  and,  primarily,  a  duty 
owing  only  to  the  Electric  Liglit  &  Water  Company,  to  make 
payment  of  the  debts,  performance  of  which  that  company  alone 
could  enforce.  The  debts  remained,  as  they  were  contracted, 
the  liabilities  of  the  party  contracting  them.  The  creditors  to 
whom  they  were  owing  had  the  election  to  accept  or  reject  the 
water  company  as  the  debtor,  as  a  party  may  acceptor  reject  any 
promise  made  by  a  third  party  to  another  for  his  benefit.  But, 
without  acceptance,  the  creditors  could  not  enforce  the  promise; 
and,  if  they  elected  not  to  accept,  the  promise  or  obligation  was 
due  only  to  the  Electric  Light  &  Water  Company,  and  that  com- 
pany alone  had  the  right  to  compel  performance  of  it.  Whether 
there  was  acceptance  or  rejection,  the  debts  were  not  paid.  If 
there  was  acceptance,  there  was  only  a  change  of  debtors,  not 
payment  of  tbe  debts.  The  creditors  accepting  simply  became 
entitled  to  enforce  for  their  own  benefit,  the  promise  or  obliga- 
tion which  had  been  made  to  their  debtor.  Henry  v.  Murphy,  54 
Ala.  246.  The  principle  on  which  the  court  seems  to  have  pro- 
ceeded is  that,  when  the  dual  obligation  to  pay,  and  the  duty  and 
authority  to  demand  and  receive  payment  of  a  debt,  co-exist  in 
the  same  person,  the  law  presumes,  and  conclusively  presumes, 
the  debt  to  be  paid.  But  there  must  be  concurrence  and  co- 
existence of  the  legal  obligation  to  pay  and  of  the  authority 
and  duty  to  demand  and  receive  payment.  If  the  two  do  not 
concur  and  co-exist,  these  is  no  room  or  reason  for  the  pre- 
sumption. The  principle,  in  this  court,  has  been  of  most 
frequent  application  when  a  debtor  to  a  testator  or  to  an  inte- 
state takes  probate  of  the  will  and  qualifies  as  executor,  or  ob- 

516 


CH.  XVII.]  PAYMENT.  ILL.   CAS. 

tains  a  grant  of  administration.  Tlien  his  debt  is  in  contemplation 
of  law  paid,  for  the  obhgation  to  pay  and  tlie  duty  and  authority 
to  demand  and  receive  payment  co-exist.  Miller^7.  Irb3''s  Adm'r, 
63  Ala.  477.  The  o'di'^ation  to  pay  the  debts  of  the  P21ectric 
Light  &  Water  Company  was  never  as-^sumed  by  or  rested  on  Carr, 
nor  had  he  the  authority  to  receive  payment  of  thorn.  The  obli- 
gation to  pay  was  the  ol)ligation  of  the  water  company,  and  not 
in  any  p'-oper  or  legal  sense  the  obli'^^ation  of  any  of  the  stock- 
holders or  officers  or  agents.  Individual  liability  for  corporate 
obligations  or  debts,  if  it  be  not  imposed  by  express  legislative 
enactment,  is  not  an  incident  of  membership  in  a  corporation. 
Smith  V.  Huckal)ee,  53  Ala.  191  ;  Ang.  &  A.  Corp.,  §§  41-591. 
Nor  is  there  liahibty  upon  corporate  olficors  or  agents  because  of 
contracts  into  which  tlicy  lawfully  enter  on  behalf  of  the  corpora- 
tion. 1  Beach  Piiv.  Corp.,  §  2G7.  In  the  argumentof  the  coun- 
sel for  the  ai)|)ellee,  it  is  said  tlie  decision  of  the  court  below  was 
based  "  on  the  idea  that  as  Carr  ha  I  received  the  §7,000  from 
the  bonds,  out  of  wMiich  the  company  had  agreed  to  pay  the  debt, 
and  it  being  Carr's  duty,  as  one  of  the  parties  holding  the  collat- 
eral, to  dt  niand  and  acce[)t  payment  of  the  collateral,  and  it  also 
being  his  duty  as  president  of  the  Water  Company  to  pay  the 
debt,  that  the  law  presumes  the  debt  to  have  been  paid." 
The  predicate  on  which  this  idea  rests  is  that  Carr  has 
received  $7,000  from  tiie  bonds.  If  the  predicate  is  not  sup- 
ported by  the  evidence,  the  idea  is  without  basis.  All  tliat  is 
said  about  bonds  in  the  course  of  the  evidence  (except  declara- 
tions imputed  to  Carr  by  the  defendant,  wliich  are  denied),  is  in 
the  testimony  of  Worabie,  stating  the  liabilities  of  the  water  com- 
pany, and  is  in  those  words:  "And  its  bonds  to  the  amount  of 
$7,000  are  out,  and  in  the  hands  of  Armstrong,  cashier  of  a  bank 
at  ]\Iemphis."  Whether  the  l)onds  wore  a  mere  dep(jsit  with 
Armstrong,  or  were  inliusted  to  him  for  negotiation,  is  not 
staled.  Certainly  there  is  no  fact  stated  from  which  it  is  fair 
and  reasonable  to  sui)pose  that  Carr  had  received  money  for 
them  to  any  amount.  It  wouM  be  as  fair  and  reasonable  to  sup- 
pose that  Womble,  who  was  the  secretary,  trea>-uior  and  general 
manager  of  the  company,  had  received  money  for  the  bond^, —  a 
supposition  which  no  trior  of  facts,  in  the  course  of  judicial  in- 
vestigation, would  be  invited  to  indulge.  Nor  is  there  any  foun- 
dation for  the  idea  that  it  was  the  duty  of  Carr,  as  its  president, 
to  make  payment  of  the  debts  of  the  water  compati}'.  There  is 
no  evidence  that  such  duty  had  been  imposed  or  authority  had 
been  conferred  by  the  company,  nor  that  cither  exists  by  geneiid 
usage.  In  1  IMor.  Priv.  Corp.,  §  537,  it  is  said:  '-The  implied 
powers  of  the  president  of  a  corporation  deponil  upon  tlie  nature 
of  the  company's  ])usinos3,  and  the  measuie  of  the  liabil- 
ity delegated  to  him  by  the  board  of  directors.  It  seems 
that  a  president  has  no  greater  power,  by  virtue  of  his  olfice 
merely,  tinn  any  other  director  of  the  company,  except 
that  he  is  the  presiding  officer  of  the  meetings  of  the  V)oard." 

517 


ILL.  CAS.  PAYMENT.  [CH.  XVII. 

The  supreme  court  of  New  Jersey  said:  "In  the  absence 
of  anything  in  tlie  act  of  incorporation  bestowing  special 
power  upon  the  president,  he  has,  from  bis  mere  official  station, 
no  more  control  over  the  corporate  property  and  funds  than  any 
other  director.  The  affairs  of  corporate  bodies  are  within  the 
exclusive  control  of  their  l)oards  of  directors,  from  whom  authority 
to  dispose  of  their  assets  must  be  derived."  What  were  the 
duties  of  the  Tuscumbia  Bunking  Company,  the  holder  of  the 
collateral,  affected  and  bound  by  the  acts  of  Carr,  one  of  the 
partners,  in  reference  to  tlie  collateral,  we  pass  for  future  con- 
sideration. For  the  reasons  we  have  given,  we  do  not  concur  in 
the  theory  on  which  the  court  based  its  first  finding  or  conclusion. 

The  second  finding  of  the  court,  that  the  presumed  payment  of 
the  collateral  operated  a  payment  of  the  notes  on  which  the  suit 
is  founded,  is  equally  untenable.  If  there  had  been  the  obliga- 
tion to  pay  the  collateral  resting  on  Carr,  it  was  an  individual 
obligation.  It  did  not  rest  on  the  banking  company,  nor  was  it 
assumed  by  him  in  the  relation  or  capacity  of  a  partner  in  the 
compan}'.  It  is  merely  elementary  to  say  that  partnership  assets 
cannot  be  appropriated  to  the  payment  of  the  individual  debts  of 
either  partner.  1  Bates  Paitn.,  §  410.  In  Burwell  v.  Springfield, 
15  Ala.  273,  it  was  said  by  Collier,  C.  J.  :  "  One  partner  cannot 
release  a  debt  due  from  the  firm,  in  order  to  extinguish  his  indi- 
vidual liability;  nor  can  a  debt  due  to  a  partnership  be  dis- 
charged by  one  of  the  partners  applying  it  in  payment  of  an  in- 
dividual debt  owing  by  him  to  the  debtor  of  the  flim,  without  the 
knowledge  and  approbation  of  the  other  members  of  the  concern." 
The  law  never  presumes  wrong  doing,  and  cannot  presume  that  a 
partner  has  misappropriated  partnership  assets,  or  that  others 
dealing  with  him  have  participated  in  the  misappropriation.  Yet 
this  is  the  presumption  which  seems  to  have  been  indulged  to 
reach  the  conclusion  that  the  notes  were  paid. 

There  are  other  grounds  upon  which  it  is  insisted  the  judgment 
of  the  court  below  should  be  affirmed.  The  first  is  that  the  debt 
due  from  the  IClectric  Light  &  Water  Company  to  the  defendant 
was  accepted  by  tlie  banking  company  in  payment  of  the  notes 
on  which  the  suit  is  founded. —  the  matter  of  the  third  and  fourth 
pleas.  Payment  of  a  debt  is  an  affirmative  plea,  the  burden  of 
proving  which  is  on  the  i)arty  pleading,  "  who  must  prove  the 
payment  of  money,  or  something  accepted  in  its  stead,  made  to 
the  plaintiff,  or  to  some  i)erson  authorized  in  his  stead  to  receive 
it."  2  Greenl.  Ev. ,  §  516.  As  the  rule  has  been  often  expressed 
in  our  decisions:  "  A  party  pleading  or  relying  on  payment  must 
prove  it.  The  fact  is  peculiarly  within  his  knowledge,  and 
though  his  adversary  in  pleading  negatives  it,  the  negative 
averment  is  taken  as  true  until  disproved."  3  Brick.  Dig. 
698,  §  1.  If  it  be  conceded  that  the  pleas  are  supported  by 
the  evidence  of  the  defendant,  the  concession  must  be  made  that 
they  are  disproved  by  the  evidence  of  Carr,  with  whom  the  trans- 
actions were  had,  and  by  whom  it  was  alleged  the  payment  was 
518 


CH.  XVIl]  PAYMENT.  ILL.   (AS. 

accfpted.  It  would  serve  no  useful  purpose  to  analyze  and  dis- 
cuss their  contradictory  evidence,  inquirinor  -wliicli  is  the  more 
consistent  witli  the  conduct  of  men  of  ordinary  prudence,  ia  the 
course  of  the  transactions  they  narrate.  The  court  below  made 
no  finding  in  ref(  rence  to  tliese  pleas  and  the  existince  of  the 
facts  on  which  they  aie  l>ascil.  If  we  resort  to  presiiin[)tiou,  the 
presumption  must  he  tliat  the  finding,  in  this  state  of  the  evidence, 
would  have  been  that  the  picas  were  not  supported, — that  the 
defendiuit  had  not  satisfitil  the  burden  of  proof  resting  ui)oa  him. 
In  Leiiraan  Bios.  v.  IMcQuecn,  65  Ala.  572,  considering  a  question 
of  j)aynuMit,  tlie  court  said:  "In  the  consideration  of  all  ques- 
tions of  this  character,  dependent  upon  conflicting  evidence,  it  is 
important  to  inquire,  and  bear  in  mind,  upon  which  party  lies 
the  burden  of  pi  oving  the  disputed  fact.  For  when  the  law  casts 
the  burden  of  jiroof  ui)0n  a  l)art3',  if  he  does  not  offer  evidence 
of  the  fact,  for  ail  the  |)urpose3  of  the  particular  ease  the  non- 
existence of  the  fa(  t  must  be  assumed.  Or  if  tlie  evidence  in 
reference  1o  the  fact  is  equally  bahanced,  or  if  it  does  not 
generate  a  rational  belief  of  tlie  existence  of  the  fact,  leaving 
the  mind  in  a  state  of  doubt  and  uncertainty,  the  party  affirmmg 
its  existence  must  fail  for  want  of  proof.  The  burden  of  prov- 
ing a  disputed  fact  rests,  in  all  cases,  u[)on  tlie  i)ariy  affirming  its 
existence,  and  claiming  to  derive  right  and  benefitfiora  it.  *  *  * 
A  plaintiff  proves  llie  existence  of  a  debt  which  the  defendant 
claims  to  have  paid.  In  the  first  instance,  proof  of  tlie  debt 
would  rest  on  ihe  plaintiff  if  it  was  denied  ;  and  if  his  evidence 
was  insufficient,  he  would  fail  for  want  of  proof.  But,  the  debt 
being  prr)ved,  the  buiden  of  proving  payment  rests  upon  the 
defendant;  and  if  his  evidence  is  insufficient  he  would  fail  for 
want  of  proof."  The  defendant  has  not  supported  the  ))lea3  of 
payment ;  the  burden  of  j)roof  resting  u[)on  him  is  not  discharged. 
The  remaining  insistence  is  that  the  banking  company,  by  its 
failure  to  collect  the  debt  of  tlie  P21ectric  Light  &  Water  Com- 
pany, suffering  the  company  to  sell  and  dispose  of  all  its  property 
and  franchises,  whereby  the  debt  was  lost,  is  answerable  to  the 
defendant  for  the  loss.  It  may  well  be  doubted  whether  the  loss 
of  the  debt  is  shown  by  the  evidence.  By  the  sale,  all  the  properly 
and  franchises  of  the  company  were  charged  with  a  trust  for  the 
payment  of  its  debts, —  a  trust  which  would  prevail  against  all 
other  than  bona  fide  ijurchasers  from  the  Tuscumbia  Water  Com- 
pany, without  notice  ;  and  the  eviilence  shows  that,  at  the  time  of 
the  trial,  the  value  of  tliepro[)erty  equaled,  if  it  did  not  exceed,  the 
debts.  However  this  may  be,  we  are  not  of  opinion  the  insistence 
can  be  supported.  The  question  depends  materially  on  the  terms 
of  the  pledge,  as  incoiporated  in  the  notes,  connected  with  the 
attending  facts.  The  first  pledge  of  the  debt  was  as  collateral 
security  for  the  payment  of  a  note  of  §100,  having  oO  days  to 
run.  After  the  maturity  of  that  noie,  there  is  a  second  pledge 
of  the  balance  of  the  debt,  to  secure  the  payment  of  a  note  for 
8306,  Laving  60  da\  s  to  run.     The  terms  of  each  pledge  are  the 

519 


ILL.  CAS.  PAYMENT.  [CH.  XVII. 

same:  "  And  I  hereby  give  to  the  holder  full  power  and  author- 
ity to  sell  or  collect,  at  my  expense,  all  or  any  portion  thereof,  at 
any  place,  either  in  the  city  of  Tuseumbia  or  elsewhere,  at  public 
or  private  sale,  at  his  option,  on  nonperformance  of  above  prom- 
ise," etc.  It  is  this  agreement  by  which  the  rights  and  duties  of 
the  parties  are  to  be  measured,  rather  than  by  any  general  rule 
of  law  which,  in  the  absence  of  the  agreement,  would  regulate 
their  general  rights  and  duties  on  a  general  pledge  of  negotiable 
or  non-negotiable  securities  for  the  payment  of  debts.  Lawrence 
V.  McCalmont,  2  How,  (U.  S.)  426;  Roberts  v.  Thompson,  14 
Ohio  St.  1;  Id.,  82  Am.  Dec.  465.  The  pledge  doubtless  con- 
templates that  the  holder  of  the  notes  would  abstain  from  any 
and  all  acts  by  which  the  value  of  the  pledge  would  be  deteriorated, 
keeping  it  ready  for  restoration  on  payment  of  the  notes.  This 
is  mere  passiveness;  and  if  payment  had  been  tendered,  it  must 
have  been  accepted.  But  it  was  not  eontemi)lated  that  the  holder 
should  exercise  any  diligence  in  the  collection  or  in  making  sale  of 
the  collaterals.  The  two  are  conjoined  by  the  agreement,  and  com- 
mitted to  the  mere  option  of  the  holder  of  the  notes.  There  was 
authority  to  collect  the  collateral.  At  the  utmost  this  would  devolve 
on  the  holder  of  the  notes  the  duty  and  liability  of  an  agent,  and, 
as  an  agent,  binding  him  only  to  ordinary  care  and  diligence.  It 
is  apparent  that,  l)y  the  exercise  of  no  ordinary  diligence,  the  pur- 
suit of  no  ordinary  legal  remedies,  there  could  have  been  col- 
lection of  the  collateral.  Before  the  maturity  of  the  first  note 
the  sale  to  the  water  company  was  effe^jted,  and  thereafter,  as 
the  bill  of  exceptions  recites,  the  Electric  Light  &  Water  Com- 
pany ceased  to  exist.  The  inference  is  that  the  company  became 
disorganized,  rendering  a  suit  at  law  against  it  impracticable.  If 
it  is  suggested  thit  equitable  remedies  could  have  been  pursued 
to  reach  and  subject  the  jjroperty  conveyed  to  the  water  com- 
pany, the  answer  is  that  such  remedies  as  are  extraordinary  the 
holder  could  not  be  expected  to  pursue.  We  find  no  room  in 
the  evidence  for  the  imputation  of  negligence  to  the  banking 
company  in  reference  to  the  collateral. 

The  result  is  the  judgment  must  be  reversed,  and  a  judgment 
here  rendered  that  the  plaintiff  have  and  recover  of  the  defendant 
the  principal  of  the  notes,  with  the  interest  computed  to  this  day, 
together  with  the  costs  in  the  circuit  court  and  the  costs  of  this 
court. 

520 


APPENDIX. 


THE   NEGOTIABLE   INSTRUMENTS   LAW 

OF     NEW     YORK,    CONNECTICUT,    COLORADO    AND     FLORIDA, 

MARYLAND,    VIRGINIA,    AND    THE    DISTRICT 

OF    COLUMBIA. 


INTRODUCTION. 

On  the  recommendation  of  the  American  Bar  Associa- 
tion, which  was  made  a  few  years  ago,  commissioners  on 
Uniform  State  Laws  have  been  appointed  by  the  govern- 
ments of  the  States,  who  are  empowered  to  meet  in  joint 
conference,  frame  and  adopt  statutes,  which  they  may 
recommend  to  their  respective  Legislatures  for  incorpora- 
tion into  the  statute  law  of  the  State-s,  and  thereby  elimi- 
nate as  much  as  possible  the  present  useless  and  confusing 
conflict  in  the  commonest  principles  and  provisions  of 
private  law.  At  the  meeting  of  the  commissioners  in  1896, 
The  Negotiable  Instruments  Law,  which  is  substantially  a 
reproduction  of  the  English  Act  on  Bills  of  Exchange  and 
Promissory  Notes,  was  adopted  and  recommended  for  gen- 
eral enactment  by  the  State  Legislatures. 

In  1897,  by  the  action  of  the  Legislatures  of  New  York, 
Connecticut,  Colorado,  and  Florida,  this  codification  of  the 
commercial  law  has  become  the  law  of  these  States,  super- 
seding all  preceding  local  statutes.  In  1898,  the  law  was 
adopted  in  Maryland  and  Virginia,  and  is  at  the  time  of  going 

521 


INTRO.  THE    NEGOTIABLK    INSTRUMENTS    LAW.  [aPP. 

to  press  before  the  United  States  Senate,  having  already 
passed  the  House  of  Representatives  with  every  prospect 
of  its  adoption  as  the  hiw  of  the  District  of  Columbia.  It 
is  confidently  expected  that  this  code  will  be  ultimately 
enacted  in  all  of  the  United  States,  particularly  since  it  has 
been  adopted  by  the  great  commercial  State  of  New  York, 
and  thirty  States  are  now  represented  by  commissioners  at 
these  annual  conferences.  In  a  number  of  the  States,  it 
has  already  been  recommended,  in  Massachusetts  by  the 
Governor  and  in  South  Carolina  by  the  Supreme  Court. 

The  Negotiable  Instruments  Law,  as  it  has  been  enacted 
by  the  Legislature  of  New  York,  is  herewith  appended,  in 
the  form  in  which  it  has  been  so  adopted,  with  the  correc- 
tions of  typographical  errors,  as  ordered  by  the  act  of 
1898.  But  in  order  that  the  reader  of  this  book  may  be 
able  to  refer  to  the  numbers  of  the  sections,  as  they  appear 
in  the  law,  as  it  has  been  adopted  by  the  other  States,  these 
numbers  are  appended  to  the  respective  sections  in  paren- 
theses. The  numbers  of  the  sections  are  the  same  in  Con- 
necticut, Colorado  and  Florida,  except  that  what  appears 
as  Art.  I.  in  the  New  York  statute,  and  as  a  preamble  in 
the  statutes  of  (Connecticut  and  Florida,  is  in  Colorado  put 
at  the  end  of  the  statute  and  numbered  §  190.  In  the 
New  York  statute  there  are  three  sections  (§§  330-332) 
which  do  not  appear  in  the  statutes,  as  adopted  by  the 
other  States.  In  every  other  respect,  the  phraseology  and 
contents  of  the  sections  are  identical. 
522 


THE   NEGOTIABLE   INSTRUMENTS   LAW. 

CHAPTER    G12,    LAWS    1897;     CHAPTER    50    OF    THE     GENERAL 

LAWS. 

(Became  a  law  May  19,  1897.) 


CHAPTER  50  OF  THE  GENERAL  LAWS. 

THE    NEGOTIABLE    INSTRUMENTS    LAW. 

Article   L  General  Provisions.     (§  1-17  ) 

IL  Form  and  Interpretation  of  Negotiable  Instruments. 
(§§  22-42.) 

III.  Consioeration.     (§§  50-55.) 

IV.  Negotiation.     (§§  60-80.) 

V.  Rights  of  Holder.     (§§  90-98.) 
VI.  Liabilities  of  Parties.     (§§  110-119.) 
VII.  Presentment  for  Payment.     (§§  130-148.) 
VIII.  Notice  of  Dishonor.     (§§  lGO-189.) 
IX.  Discharge  of   Negotiable   Instruments.     (§§  200-206.) 
X.  Bills  of  Exchange;  Form  and  Interpretation.     (§§  210- 
216.) 
XI.  Acceptance.     (§§  220-230.) 
XII.  Presentment  for  Acceptance.     (§§  240-248.) 

XIII.  Protest.     (§§  2G0-268.) 

XIV.  Acceptance  for  Honor.     (§§  280-290.) 
XV.  Payment  for  Honor.     (§§  300-306.) 

XVI,  Bills  in  a  Set.     (§§  310-315.) 
XVII.  Promissory  Notes  and  Checks.     (§§  320-325.) 
XVIII.  Notes  Given  for  a  Patent  Right  and  for  a  Specula- 
tive Consideration.     (§§  330-332  ) 
XIX.  Laws  Repealed,  When  to  Take  Effect.     (§§  340-341.) 

523 


ARTICLE    I. 

GENERAL  PROVISIONS.! 

Section  1,  Short  title. 

2.  Definitions  and  meaninjj;  of  terms. 

3.  Person  primarily  liable  on  instrument. 

4.  Reasonable  time;  vrhat  constitutes. 

5.  Time  how  computed;  when  last  day  falls  on  holiday. 

6.  Application  of  chapter. 

7.  Rule  of  law  merchant;  when  governs. 

Section  1.  Short  title. —  This  act  shall  be  known  as 
the  negotiable  instruments  law. 

§  2.  Definitions  and  meaning  of  terms. —  In  this  act, 
unless  the  context  otherwise  requires:  — 

"  Acceptance  "  means  an  acceptance  completed  by  de- 
livery or  notification. 

"  Action  "  includes  counter-claim  and  set-off. 

"Bank"  includes  any  peison  or  association  of  persons 
carrying  on  the  busine>s  of  banking,  whether  incorporated 
or  not. 

"Bearer"  means  the  person  in  possession  of  a  bill  or 
note  which  is  payable  to  bearer. 

"  Bill"  means  bill  of  exchange,  and  "note"  means 
negotiable  promissory  note. 

"Delivery"  means  transfer  of  possession,  actual  or 
constructive,  from  one  person  to  another. 

"  Holder  "  means  the  payee  or  indorsee  of  a  bill  or  note, 
who  is  in  possession  of  it,  or  the  bearer  thereof. 

!  (In  Connecticut  and  Florida,  Art.  I.  appears  as  a  preamble,  without 
being  sectionized;  while  in  Colorado,  it  appears  at  the  end  of  the  statute 
as  §  190.) 

524 


APP.]  GKNERAL    PROVISIONS.  ART.    1 

"  Indorsement  "  means  an  indorsement  completed  by 
delivery. 

"Instrument  "    means  negotiable  instrument. 

"  Issue  "  means  the  first  delivery  of  the  instrument, 
complete  in  form  to  a  person  who  takes  it  as  a  holder. 

'*  Person  "  includes  a  body  of  persons,  whether  incor- 
porated or  not. 

"  Value  "  means  valual)le  consideration. 

"  Written  "  includes  printed,  and  "  writing  "  includes 
print. 

§  3.  Person     primarily    liable    on    instrument. —  The 

person  "  primarily  "  liable  on  an  instrument  is  the  person 
who  by  the  terms  of  the  instrument  is  absolutely  required 
to  pay  the  same.    All  other  parties  are  "secondarily"  liable. 

§  4.  Reasonable  time,  what  constitutes. —  In  determin- 
ing what  is  a  "  reasonable  time  "  or  an  "  unreasonable 
time  "  regard  is  to  1)6  had  to  the  nature  of  the  instrument, 
the  usage  of  trade  or  business  (if  any)  with  respect  to 
such  instruments,  and  the  facts  of  the  particular  case. 

§  5.  Time,  bow  computed;  when  last  day  falls  on 
holiday. —  Where  the  day,  or  the  last  day,  for  doing  any 
act  herein  required  or  permitted  to  be  done  falls  on  Sun- 
day or  on  a  holiday,  the  act  may  be  done  on  the  next 
succeeding    secular  or    business  day. 

§  6.  Application  of  chapter. —  The  provisions  of  this 
act  do  not  apply  to  negotiable  instruments  made  and 
delivered  prior  to  the  passage  hereof. 

§  7.  Law  merchant;  when  jjoverns. —  In  any  case  not 
provided  for  in  this  act  the  rules  of  the  law  merchant 
shall  govern. 

525 


ARTICLE   II. 

FORM  AND  INTERPRETATION, 

Section  20.  Form  of  negotiable  instrument. 

21.  Certainty  as  to  sum;  what  constitutes 

22.  When  promise  is  unconditional. 

23.  Determinable  future  time;  what  constitutes. 

24.  Additional  provisions  not  affecting  negotiability. 

25.  Omissions;  seal;  particular  money. 

26.  When  payable  on  demand. 

27.  When  payable  to  order. 

28.  When  payable  to  bearer. 

29.  Terms  when  sufficient. 

30.  Date,  presumption  as  to. 

31.  Ante-dated  and  post-dated. 

32.  When  date  may  be  inserted. 

33.  Blanks,  when  may  be  filled. 

34.  Incomplete  instrument  not  delivered. 

35.  Delivery;  when  effectual ;  when  presumed. 

36.  Construction  where  instrument  is  ambiguous. 

37.  Liability  of  persons  signing  in  trade  or  assumed  name. 

38.  Signature  by  agent;  authority;  how  shown. 

39.  Liability  of  person  signing  as  agent,  et  cetera. 

40.  Signature  by  procuration;  effect  of. 

41.  Effect  of  indorsement  by  infant  or  corporation. 

42.  Forged  signature;  effect  of . 

§  20  ( §  1).  Form  of  negotiable  instriiment. —  An  in- 
strument to  be  negotiable  must  conform  to  the  following 
requirements  : — 

1.  It  must  be  in  writing  and  signed  by  the  maker  or 
drawer. 

2.  Must  contain  an  unconditional  promise  or  order  to 
pay  a  sura  certain  in  money; 

3.  Must  be  payable  on  demand,  or  at  a  fixed  or  deter- 
minable future  time; 

526 


APP.]  FORM    AND    INTEHPHETATION.  ART.   II. 

4.  Must  he  [jayublc  to  order  or  to  bearer,  and 

5.  Where  the  instrument  is  addressed  to  a  drawee,  he 
must  be  named  or  otherwise  indicated  therein  with  reason- 
able certainty, 

§  21  (§  2).   Certainty  as  to  sum;    what  constitutes. — 

The  sum  payable   is   a  sum  certain  within  the  meaning  ol" 
this  act,  although  it  is  to  l)e  paid:  — 

1.  With  interest ;   or 

2.  By  stated  installments;   or 

3.  By  stated  installments,  with  a  provision  that  upon 
default  ill  payment  of  any  installment  or  of  interest,  the 
whole  shiiU  l)ecome  due;  or 

4.  With  exchange,  whether  at  a  fixed  rate  or  at  the  cur- 
rent rate ;  or 

5.  W^ilh  costs  of  collection  or  an  attorney's  fee,  in  case 
payment  shall  not  be  made  at  maturity. 

§  22  (§  8).  Wlien  promise  is  unconditional. —  An  un- 
qualified order  or  promise  (o  pay  is  unconditional  within 
the  meaning  of  this  act,  though  coupled  with:  — 

1,  An  indication  of  a  particular  fund  out  ot"  which 
reimbursement  is  to  be  made,  or  a  particular  account  to  be 
debited  with  the  amount  ;  or 

2.  A  statement  of  the  transaction  which  gives  rise  to  the 
instrument. 

But  an  order  or  promise  to  pay  out  of  a  particular  fund 
is  not  unconditional, 

§  23  (§  4).  Determinable  future  time;  what  consti- 
tutes.—  An  instrument  is  payable  at  a  determinable  future 
time,  within  the  meaning  of  this  act,  which  is  expressed  to 
be  payable:  — 

1.  At  a  fixed  period  after  date;  or  sight  ;  or 

527 


ART.   II.  THE    NEGOTIABLK    INSTRUMENTS    LAW.  [aPP. 

2.  Oil  or  before  a  fixed  or  (lctermin;ible  future  lime 
specified  therein ;  or 

3.  On  or  at  a  fixed  period  after  the  occurrence  of  a  spec- 
fied  event,  which  is  certain  to  happen,  though  the  time  of 
happening  be  uncertain. 

An  instrument  payable  upon  a  contingency  is  not  negoti- 
able,and  the  happening  of  the  event  does  not  cure  the  defect. 

§  24  (§  5).  Additional  provisions  not  affecting  nego- 
tiability.—  An  instrument  which  contains  an  order  or 
promise  to  do  any  act  in  addition  to  the  payment  of  money 
is  not  negotiable.  But  the  negotiable  character  of  an  in- 
strument otherwise  negotiable  is  not  affected  by  a  provision 
which:  — 

1.  Authorizes  the  sale  of  collateral  securities  in  case  the 
instrument  be  not  paid  at  maturity  ;  or 

2.  Authorizes  a  confession  of  judgment  if  the  instrument 
be  not  paid  at  maturity ;  or 

3.  Waives  the  benefit  of  any  law  intended  for  the  advan- 
tage or  protection  of  the  obligor  ;  or 

4.  Gives  the  holder  an  election  to  require  something  to 
be  done  in  lieu  of  payment  of  money. 

But  nothing  in  this  section  shall  validate  any  provision 
or  stipulation  otherwise  illegal. 

§  25  (§  6).  Omissions;  seal;  particular  money. —  The 
validity  and  negotiable  character  of  an  instrument  are  not 
affected  by  the  fact  that : — 

1.  It  is  not  dated  ;  or 

2.  Does  not  specify  the  value  given,  or  that  any  value 
has  been  given  therefor;  or 

3.  Does  not  specify  the  place  where  it  is  drawn  or  the 
place  where  it  is  payable;  or 

528 


APP.]  FORM   AND    INTERPRETATION.  ART.  II. 

4.  Bears  a  seal ;  or 

5.  Designates  a  particular  kind  of  current  money  in  which 
payment  is  to  be  made. 

But  nothing  in  this  section  shall  alter  or  repeal  any  statute 
requiring  in  certain  cases  the  nature  of  the  consideration  to 
be  stated  in  the  instrument. 

§  26  (§  7),  When  payable  on  demand. —  An  instru- 
ment is  payable  on  demand  : — 

1.  Where  it  is  expressed  to  be  payable  on  demand,  or  at 
sight,  or  on  presentation  ;   or 

2.  In  which  no  time  for  payment  is  expressed. 

Where  an  instrument  is  issued,  accepted  or  indorsed  when 
overdue,  it  is,  as  regards  the  person  so  issuing,  accepting 
or  indorsing  it,  payable  on  demand. 

§  27  (§  8).  When  payable  to  order. —  The  instrument 
is  payable  to  order  where  it  is  drawn  payable  to  the  order 
of  a  specified  person  or  to  him  or  his  order.  It  may  be 
drawn  payable  to  the  order  of: — 

1.  A  payee  who  is  not  a  maker,  drawer  or  drawee;  or 

2.  The  drawer  or  maker  ;  or 

3.  The  drawee;   or 

4.  Two  or  more  payees  jointly  ;  or 

5.  One  or  some  of  several  payees  ;  or 

0.  The  holder  of  an  office  for  the  time  beins:. 

Where  the  instrument  is  payable  to  order  the  payee  must 
be  named  or  otherwise  indicated  therein  with  reasonable 
certainty. 

§  28  (  §  9).  When  payable  to  bearer. —  The  instrument 
is  payable  to  bearer  : — 

1.  When  it  is  expressed  to  be  so  payable;   or 

34  52fl 


ART.    II.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

2.  When  it  is  payable  to  a  person  named  therein  or 
bearer ;   or 

3.  When  it  is  payable  to  the  order  of  a  fictitious  or  non- 
existing  person,  and  such  fact  was  known  to  the  person 
making  it  so  payable  ;  or 

4.  When  the  name  of  the  payee  does  not  purport  to  be 
the  name  of  any  person ;   or 

5.  When  the  only  or  last  indorsement  is  an  indorsement 
in  blank. 

§  29  (§  10).  Terms,  when  sufficient. —  The  instrument 
need  not  follow  the  language  of  this  act,  but  any  terms  are 
sufficient  which  clearly  indicate  an  intention  to  conform  to 
the  requirements  thereof. 

§  30  (§11).  Date,  presumption  as  to. —  Where  the  in- 
strument or  an  acceptance  or  any  indorsement  thereon  is 
dated,  such  date  is  deemed  prima  facie  to  be  the  date  of 
the  making,  drawing,  acceptance  or  indorsement,  as  the 
case  may  be. 

§  31  (§  12).  Ante-dated  and  post-dated. —  The  instru- 
ment is  not  invalid  for  the  reason  only  that  it  is  ante-dated 
or  post-dated,  provided  this  is  not  done  for  an  illejral  or 
fraudulent  purpose.  The  person  to  whom  an  instrument  so 
dated  is  delivered  acquires  the  title  thereto  as  of  the  date 
of  delivery. 

§32  (§  13).  When  date  may  be  inserted. —  Where  an 
instrument  expressed  to  be  payable  at  a  fixed  period  after 
date  is  issued  undated,  or  where  the  acceptance  of  an  in- 
strument payable  at  a  fixed  period  after  sight  is  undated, 
any  holder  may  insert  therein  the  true  date  of  issue  or  ac- 
ceptance, and  the  instrument  shall  be  payable  accordingly. 
530 


APP.]  FORM    AXD    INTERPRETATION.  ART.  II. 

The  insertion  of  a  wrong  date  does  not  avoid  the  instru- 
ment in  the  hands  of  a  subsequent  holder  in  due  course  ; 
but  as  to  him,  the  date  so  inserted  is  to  be  regarded  as  the 
true  date. 

§  33  ( §  14).  Blanks;  when  may  be  filled. —  Where  the 
instrument  is  wanting  in  any  material  particular,  the  per- 
son in  possession  thereof  has  a  jjyima  facie  authority  to 
complete  it  by  filling  up  the  blanks  therein.  And  a  signa- 
ture on  a  blank  paper  delivered  by  the  person  making  the 
signature  in  order  that  the  paper  may  be  converted  into  a 
negotiable  instrument  operates  as  a  prima  facie  authority 
to  fill  it  up  as  such  for  any  amount.  In  order,  however, 
that  any  such  instrument,  when  com[)leted,  may  be  enforced 
against  any  person  who  became  a  party  thereto  prior  to  its 
completion,  it  must  be  filled  up  strictly  in  accordance  with 
the  authority  given  and  within  a  reasonable  time.  But  if 
any  such  instrument,  after  completion,  is  negotiated  to  a 
holder  in  due  course,  it  is  valid  and  effectual  for  all  pur- 
poses in  his  hands,  and  he  may  enforce  it  as  if  it  had  been 
filled  up  strictly  in  accordance  with  the  authority  given  and 
within  a  reasonable  time. 

§  34  (§  15).  Incomplete  instrument  not  delivered. — 
Where  an  incomplete  instrument  has  not  been  delivered  it 
will  not,  if  completed  aid  negotiated,  without  authority, 
be  a  valid  contract  in  the  hands  of  any  holder,  as  against 
any  person  whose  signature  was  placed  thereon  befori> 
delivery. 

§  35  (§  l(i).  Delivery;  when  effectual;  when  pre- 
sumed.—  Eveiy  contract  on  a  negotiable  instrument  is 
incomplete  and  revocable  until  delivery  of  the  instrument 

531 


ART.   II.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

for  the  purpose  of  giving  effect  thereto.  As  between  im- 
mediate parties,  and  as  regards  a  remote  party  other  than 
a  holder  in  due  course,  the  delivery,  in  order  to  be  effectual, 
must  be  made  cither  by  or  under  the  authority  of  the  party 
making,  drawing,  accepting  or  indorsing,  as  the  case  may 
be  ;  and  in  such  case  the  delivery  may  be  shown  to  have 
been  conditional,  or  for  a  special  purpose  only,  and 
not  for  the  purpose  of  transferring  the  property  in 
the  instrument.  But  where  the  instrument  is  in 
the  hands  of  a  holder  in  due  course,  a  valid  delivery 
thereof  by  all  parties  prior  to  him  so  as  to  make  them  lia- 
ble to  him  is  conclusively  presumed.  And  where  the 
instrument  is  no  longer  in  the  possession  of  a  party  whose 
signature  appears  thereon,  a  valid  and  intentional  delivery 
by  him  is  presumed  until  the  contrary  is  proved. 

§  36  (§  17).  Coiisstruction  where  instrument  is  ambig- 
uous.—  Where  the  language  of  the  instrument  is  ambig- 
uous, or  there  are  omissions  therein,  the  following  rules  of 
construction  apply  :  — 

1.  Where  the  sum  payable  is  expressed  in  words  and 
also  in  figures  and  there  is  a  discrepancy  between  the  two, 
the  sum  denoted  by  the  words  is  the  sum  payable  ;  but  if 
the  words  are  ambiguous  or  uncertain,  references  may  be 
had  to  the  figures  to  fix  the  amount ; 

2.  Where  the  instrument  provides  for  the  payment  of 
interest,  without  specifying  the  date  from  which  interest 
is  to  run,  the  interest  runs  from  the  date  of  the  instru- 
ment, and  if  the  instrument  is  undated,  from  the  issue 
thereof ; 

3.  Where  the  instrument  is  not  dated,  it  will  be  consid- 
ered to  be  dated  as  of  the  time  it  was  issued  ; 

4.  Where  there    is    a  conflict  between  the  written  and 

532 


APP.]  FORM    AND    INTEUPRETATION.  ART.   II. 

printed  provisions  of  tlie  instrument,  the  written  provisions 
prevail  ; 

5.  Where  the  instrument  is  so  ambiguous  that  there  is 
doubt  whether  it  is  a  bill  or  note,  the  holder  may  treat  it 
as  either  at  his  election; 

6.  Where  a  signature  is  so  placed  upon  the  instrument 
that  it  is  not  clear  in  what  capacity  the  person  making  the 
same  intended  to  sign,  he  is  to  be  deemed  an  indorser; 

7.  Where  an  instrument  containing  the  words  "  I  promise 
to  pay  "  is  signed  by  two  or  more  persons,  they  are  deemed 
to  be  jointly  and  severally  liable  thereon. 

§  '"57  (§  18).  Liability  of  person  signing'  in  trade  or 
assumed  name. —  No  person  is  liable  on  the  instrument 
whose  signature  does  not  appear  thereon,  except  as  herein 
otherwise  expressly  provided.  But  one  who  signs  in  a 
trade  or  assumed  name  will  be  liable  to  the  same  extent 
as  if  he  had  signed  in  his  own  name. 

§  38  (  §   19).   Signature     by     agent;      autliority ;     Low 

shown. —  The  signature  of  any  party  may  bo  made  by  a 
duly  authorized  agent.  No  particular  form  of  appointment 
is  necessary  for  this  purpose;  and  the  authority  of  the 
agent  may  be  established  as  in  other  cases  of  agency. 

§  39  (§  20).  Liability  of  person  signing  as  agent, 
etc. —  Where  the  instrument  contains  or  a  person  adds  to 
his  signature  words  indicating  that  he  signs  for  or  on 
behalf  of  a  principal,  or  in  a  representative  capacity,  he 
is  not  liable  on  the  instrument  if  he  was  duly  authorized; 
but  the  mere  addition  of  words  describing  him  as  an  agent, 
or  as  filling  a  representative  character,  without  disclosing 
his  princi));il,  does  not  exempt  him  from  personal  liability. 

533 


ART.  11.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

§  40  (§  21).   Signature  by    procuration;    effect    of. — 

A  signature  by  "  procuration  "  operates  as  notice  that  the 
agent  has  but  a  limited  authority  to  sign,  and  the  principal 
is  bound  only  in  case  the  agent  in  so  signing  acted  within 
the  actual  limits  of  his  authority. 

§  41  (§  22).  Effect  of  indorsement  by  infant  or  corpo- 
ration.—  The  indorsement  or  assignment  of  the  instru- 
ment by  a  corporation  or  by  an  infant  passes  the  property 
therein,  notwithstanding  that  from  want  of  capacity  the 
corporation  or  infant  may  incur  no  liability  thereon. 

§  42  (§  23).  Forjjed  signature;  effect  of. —  Where  a 
signature  is  forged  or  made  without  authority  of  the  per- 
son whose  signature  it  purports  to  be,  it  is  wholly  inoper- 
ative, and  no  right  to  retain  the  instrument,  or  to  give  a 
discharge  therefor,  or  to  enforce  payment  thereof  against 
any  party  thereto,  can  be  acquired  through  or  under  such 
signature,  unless  the  party  ngain-t  whom  it  is  sought  to 
enforce  such  right  isi)recluded  from  setting  up  the  forgery 
or  want  of  authority. 
534 


ARTICLE   Til. 

CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

Section  50.  Presumption  of  consideration. 

51.  What  constitutes  consideration. 

52.  What  constitutes  holder  for  value. 

53.  When  lien  on  instrument  constitutes  holder  for  value. 

54.  Effect  of  want  of  consideration. 

55.  Liability  of  accommodation  party. 

§  50  (  §  24).  Presumption  of  consideration.  —  Every 
negotiable  instrument  is  deemed  ^>"ma  facie  to  have  been 
issued  for  a  valuable  consideration;  and  every  person 
whose  t^ignaturo  appears  thereon  to  have  become  a  party 
thereto  for  value. 

§  51  (§  25).  Consideration,  what  constitutes. — Value 
is  any  consideration  sufficient  to  support  a  simple  contract. 
An  antecedent  or  pre-existing  debt  constitutes  value.;  and 
is  deemed  such  whether  the  instrument  is  pa3'able  on 
demand  or  at  a  future  time. 

§  52  (§  2(5).  What  constitutes  holder  for  value. — 
Where  value  has  at  any  time  been  given  for  the  instru- 
ment, the  holder  is  deemed  a  holder  for  value  in  respect  to 
all  parties  who  became  such  prior  to  that  time. 

§  53  (§  27).  "Wlicn  lien  on  instrument  constitutes 
holder  for  value. — Where  the  holiler  has  a  lieu  on  the 
instrument,  arising  either  from  contract  or  by  implication 
of  law,  he  is  deemed  a  holder  for  value  to  the  extent  of 
his  lien. 

535 


ART.  III.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

§  54  (§  28).  Effect  of  waut  of  cousideration. — Ab- 
sence or  failure  of  consideration  is  matter  of  defense  as 
against  any  person  not  a  holder  in  due  course ;  and  partial 
failure  of  consideration  is  a  defense  pro  tanto  whether  the 
failure  is  an  ascertained  and  liquidated  amount  or  other- 
wise. 

§  55  (§  29).  Liability  of  accommodation  party. — An 
accommodation  party  is  one  who  has  signed  the  instrument 
as  maker,  drawer,  acceptor  or  indorser,  without  receiving 
value  therefor,  and  for  the  purpose  of  lending  his  name  to 
some  other  person.  Such  a  person  is  liable  on  the  instru- 
ment to  a  holder  for  value,  notwithstanding  such  holder  at 
the  time  of  taking  the  instrument  knew  him  to  be  only 
an  accommodation  party. 
536 


ARTICLE   IV. 

NEGOTIATION. 

Section  60,  What  constitutes  negotiation. 

61.  Indorsement;  how  made. 

62.  Indorsement  must  be  of  entire  instrument. 

63.  Kinds  of  indorsement. 

64.  Special  indorsement;  indorsement  in  blank. 

65.  Blank  indorsement;  how  changed  to  special  indorsement. 

66.  When  indorsement  restrictive. 

67.  Effect  of  restrictive  indorsement;  rights  of  indorsee. 

68.  Qualified  indorsement. 

69.  Conditional  indorsement. 

70.  Indorsement  of  instrument  payable  to  bearer. 

71.  Indorsement  where  payable  to  two  or  more  persons. 

72.  Effect    of    instrument   drawn  or    indorsed  to   a  person  as 

cashier. 

73.  Indorsement  where  name  is  misspelled,  et  cetera. 

74.  Indorsement  in  representative  capacity. 

75.  Time  of  indorsement;  presumption. 

76.  Place  of  indorsement:  presumption. 

77.  Continuation  of  negotiable  character. 

78.  Striking  out  indorsement. 

79.  Transfer  without  indorsement;  effect  of. 

80.  When  prior  party  may  negotiate  instrument. 

§  60  (§  30).  What  constitutes  negotiation. —  An  in- 
strument is  negotiated  when  it  is  transferred  from  one 
person  to  another  in  such  manner  as  to  constitute  the 
transferee  the  holder  thereof.  If  payable  to  bearer  it  is 
negotiated  by  delivery  ;  if  payable  to  order  it  is  negotiated 
by   the   indorsement  of  the  holder  completed  by  delivery. 

§  61  (§  31).  Indoi'seiucut ;  liow  made. —  The  indorse- 
ment   must  be  written  on   the  instrument  itself  or  upon  a 

537 


ART.   IV.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aI'P. 

paper  attached  thereto.  The  signature  of  the  iiidorser, 
without  additional  words,  is  a  sufficient  indorsement. 

§  62  ( §  32).  ludorsemeut  must  be  of  entire  instru- 
ment.—  The  indorsement  must  be  an  indorsement  of  the 
entire  instrument.  An  indorsement,  which  purports  to 
transfer  to  the  indorsee  a  part  only  of  the  amount  payable, 
or  which  purports  to  transfer  the  instrument  to  two  or 
more  indorsees  severally,  does  not  operate  as  a  negotiation 
of  the  instrument.  But  where  the  instrument  has  been 
paid  in  part,  it  may  be  indorsed  as  to  the  residue. 

§  63  (  §  33).  Kinds  of  indorsement. —  An  indorsement 
may  be  either  special  or  in  blank;  and  it  may  also  be  either 
restrictive  or  qualified,  or  conditional. 

§  64  (§  34).     Special     indorsement;     indorsement    in 

blank.  —  A  special  indorsement  specifies  the  person  to 
whom,  or  to  whose  order  the  instrument  is  to  be  payable  ; 
and  the  indorsement  of  such  indorsee  is  necessary  to  the 
further  nesfotiation  of  the  instrument.  An  indorsement  in 
blank  specifies  no  indorsee,  and  an  instrument  so  indorsed 
is  payable  to  bearer,  and  may  be  negotiated  by  delivery. 

§  65  (§35).  Blank  indorsement;  how  changed  to 
special  indorsement. —  The  holder  may  coQVcrt  a  blank 
indorsement  into  a  special  indorsement  by  writing  over 
the  signature  of  the  indorser  in  blank  any  contract  con- 
sistent with  the  character  of  the  indorsement. 

§  66  ( §  36).  When  indorsement  restrictive. —  An  in- 
dorsement is  restrictive,  which  cither  :  — 

1.  Prohibits  the  further  negotiation  of  the  instrument;  or 

2.  Constitutes  the  indorsee  the  agent  of  the  indorser  ;  or 

538 


APP.]  NEGOTIATION.  ART.  IV. 

3.  Vests  the  title  in  the  indorsee  in  trust  for  or  to  tlie 
use  of  some  other  person. 

But  the  mere  absence  of  words  implying  power  to  nego- 
tiate does  not  make  an  indorsement  restrictive. 

§  67  (.§  37).  Effect  of  restrictive  indorsement;  rights 
of  indorsee. —  A  restrictive  indorsement  confers  upon  the 
indorsee  the  right;  — 

1.  To  receive  payment  of  the  instrument ; 

2.  To  Ijring  any  action  thereon  that  the  indorser  could 
bring ; 

3.  To  transfer  his  rights  as  such  indorsee,  where  the 
form  of  the  indorsement  authorizes  him  to  do  so. 

But  all  subsequent  indorsees  acquire  oidy  the  title  of 
the  first  indorsee  under  the  restrictive  indorsement. 

§  68  (§  38).  Qualified  indorsement. —  Qualified  in- 
dorsement constitutes  the  indorser  a  mere  assignor  of  the 
title  to  the  instrument.  It  may  be  made  by  adding  to  the 
indorsee's  signature  the  words  "  without  recourse  "  or  any 
words  of  similar  import.  Such  an  indorsement  does 
not  impair  the  negotiable  character  of  the  instrument. 

§  61)  (§  39).  Conditional  indorsement. —  Where  an  in- 
dorsement is  conditional,  a  party  required  to  pay  the  in- 
strument may  disregard  the  condition,  and  make  payment 
to  the  indorsee  or  his  transferee,  whether  the  condition 
has  been  fulfilled  or  not.  But  any  person  to  whom  an 
instrument  so  indorsed  is  negotiated,  will  hold  the  same, 
or  the  proceeds  thereof,  subject  to  the  rights  of  the  person 
indorsing  conditionally. 

§  70  (§  40).  Indorsement  of  instrument  payable  to 
bearer. —  Where  an  instrument,  payable  to  bearer,  is  in- 

539 


ART.   IV.  TllH    KEGOTIABLE    JNSTKUxAIENTS    LAW.  [aPP. 

dorsed  specially,  it  may  nevertheless  be  further  negotiated 
by  delivery;  but  the  person  indorsing  specially  is  liable  as 
indorser  to  only  such  holders  as  make  title  through  his 
indorsement. 

§  71  (§  41).   Indorsement    where    payable    to    two    or 

more  persons. —  Where  an  instrument  is  payable  to  the 
order  of  two  or  more  payees  or  indorsers  who  are  not 
partners,  all  must  indorse,  unless  the  one  indorsing  has 
authority  to  indorse  for  the  others. 

§  72  (§  42).  Effect  of  instrument  drawn  or  indorsed 
to  a  person  as  cashier. —  Where  an  instrument  is  drawn 
or  indorsed  to  a  person  as  "  cashier"  or  other  fiscal  officer 
of  a  bank  or  corporation,  it  is  deemed  pj^iiPM  J^acie  to  be 
payable  to  tiie  bank  or  corporation  of  which  he  is  such 
officer;  and  may  be  negotiated  by  either  the  indorsement 
of  the  bank  or  corporation,  or  the  indorsement  of  the 
officer. 

§  73  (§  43).  Indorsement  where  name  is  misspelled, 
et  cetera. —  Where  the  name  of  a  payee  or  indorsee  is 
wrongly  designated  or  misspelled,  he  may  indorse  the 
instrument  as  therein  described,  adding,  if  he  think  fit,  his 
proper  signature. 

§  74.  (§  44).  Indorsement  in  representative  capac- 
ity.—  Where  any  person  is  under  obligations  to  indorse 
in  a  representative  capacity,  he  may  indorse  in  such  terms 
as  to  negative  personal  liability. 

§  75  (§45).  Time  of  indorsement;  presumption. — Ex- 
cept where  an  indorsement  bears  date  after  the  maturity 
of  the  instrument,  every  negotiation  is  deemed  prima  facie 
to  have  been  effected  before  the  instrument  was  overdue. 
540 


APP.J  NEGOTIATION.  ART.   IV. 

§  76  (§  46).  Place  of  indorsement;  presumption. — 
Except  where  the  contrjiiy  appears,  every  indorsement  is 
presumed  prima  facie  to  have  beea  made  at  the  place  where 
the  instrument  is  dated. 

§  77  (§  47).  Continuation  of  negotiable  character. — 
An  instrument  negotiable  in  its  origin  continues  to  be  nego- 
tiable until  it  has  been  restrictively  indorsed  or  discharged 
by  payment  or  otherwise. 

§  78  (§  48).  Striking  out  indorsement. —  The  holder 
may  at  any  time  strike  out  any  indorsement  which  is  not 
necessary  to  his  title.  The  indorser  whose  indorsement 
is  struck  out,  and  all  indorsers  subsequent  to  him,  are 
thereby  relieved  from  liability  on  the  instrument. 

§  79  (§  49).  Transferwithout  indorsement;  effect  of. — 
Where  the  holder  of  an  indorsement  payable  to  his  order 
transfers  it  for  value  without  indorsing  it,  the  transfer 
vests  in  the  transferee  such  title  as  the  transferrer  had 
therein,  and  the  transferee  acquires,  in  addition,  the  right 
to  have  the  indorsement  of  the  transferrer.  But  for  the 
purpose  of  determining  whether  the  transferee  is  a  holder 
in  due  course,  the  negotiation  takes  effect  as  of  the  time 
when  the  indorsement  is  actually  made. 

§  80  (§  50).  When  prior  party  may  negotiate  instru- 
ment.—  Where  an  instrument  is  negotiated  back  to  a  prior 
party,  such  party  may,  subject  to  the  provisions  of  this 
act,  reissue  and  further  negotiate  the  same.  But  he  is  not 
entitled  to  enforce  payment  thereof  against  any  intervening 
party  to  whom  he  was  personally  liable. 

541 


■x-* 


ARTICLE  V. 

RIGHTS  OF  HOLDERS. 

Section  90.  Rights  of  holder  to  sue;  payment. 

91.  What  constitutes  a  holder  in  due  course. 

92.  When  person  not  deemed  holder  in  due  coarse. 

93.  Notice  before  full  amount  paid. 

94.  When  title  defective. 

95.  What  constitutes  notice  of  defect. 

96.  Rights  of  holder  in  due  course. 

97.  When  subject  to  original  defenses. 

98.  Who  deemed  holder  in  due  course. 

§  90  (§  51).  Right  of  holder  to  sue;  payment. —  The 

holder  of  a  negotiable  instrument  may  sue  thereon  in  his 
own  name  ;  and  payment  to  him  in  due  course  discharges 
the  instrument. 

§  91  (§  52).   What  constitutes  a  holder  in  due  course. — 

A  holder  in  due  course  is  a  holder  who  has  taken  the  instru- 
ment under  the  following  conditions:  — 

1.  That  it  is  complete  and  regular  upon  its  face  ; 

2.  That  he  became  the  holder  of  it  before  it  was  over- 
due, and  without  notice  that  it  had  been  previously  dis- 
honored,  if   such   was  the   fact; 

3.  That  he  took  it  in  good  faith  and  for  value; 

4.  That  at  the  time  it  was  negotiated  to  him  he  had  no 
notice  of  any  infirmity  in  the  instrument  or  defect  in  the 
title  of  the  person  negotiating  it. 

§  92  (§  53).   When  person  not  deemed  holder  In  due 
course. —  Where  an  instrument  payable  on  demand  is  ne- 
gotiated an  unreasonable  length  of  time  after  its  issue,  the 
holder  is  not  deemed  a  holder  in  due  course. 
542 


APP.]  RIGHTS    OF    HOLDERS.  ART.  V. 

§  93  (§  54).  Notice  before  full  amount  paid. —  Where 
the  transferee  receives  notice  of  any  infirmity  in  the  instru- 
ment or  defect  in  the  title  of  the  person  negotiating  the 
same  before  he  has  paid  the  full  amount  agreed  to  be  paid 
therefor,  he  will  be  deemed  a  holder  in  due  course  only 
to  the  extent  of  the  amount  theretofore  paid  by  him. 

§  94  (§  55).  When  title  defective. —  The  title  of  a  per- 
son who  negotiates  an  instrument  is  defective  within  the 
meaning  of  this  act  when  he  obtained  the  instrument,  or 
any  signature  thereto,  by  fraud,  duress,  or  force  and  fear, 
or  other  unlawful  means,  or  for  an  illegal  consideration, 
or  when  he  negotiates  it  in  breach  of  faith,  or  under  such 
circumstances  as  amounts  to  a  fraud. 

§  95  (§  56).  What  constitutes  notice  of  defect. —  To 
constitute  notice  of  an  infirmity  in  the  instrument  or  defect 
in  the  title  of  the  person  negotiating  the  same,  the  person 
to  whom  it  is  negotiated  must  have  had  actual  knowledo^e 
of  the  infirmity  or  defect,  or  knowledge  of  such  facts  that 
his  action  in  taking  the  instrument  amounted  to  bad  faith. 

§  96  (§  57).  Rights  of  holder  iu  due  course. —  A  holder 
in  due  course  holds  the  instrument  free  from  any  defect 
of  title  of  prior  parties  and  free  from  defenses  available  to 
prior  parties  among  themselves,  and  may  enforce  payment 
of  the  instrument  for  the  full  amount  thereof  against  all 
parties  liable  thereon. 

§  97  (§  58).  When  subject  to  original  defenses. — 
In  the  hands  of  any  holder  other  than  a  holder  in 
due  course,  a  negotiable  instrument  is  subject  to  the 
same  defenses  as  if  it  were  non-negotiable.  But  a 
holder  who  derives  his  title  through  a  holder  in  due  course, 

543 


ART.  V.  THE    NEGOTrABLE    INSTRUMENTS    LAW.  [aPP. 

and  who  is  not  himself  a  party  to  any  fraud  or  illegality 
affecting  the  instrument,  has  all  the  rights  of  such  former 
holder  in  respect  of  all  parties  prior  to  the  latter. 

§  98  (§  59).   Who    deemed    holder    in   due    course. — 

Every  holder  is  deemed  ^Wma  facie,  to  be  a  holder  in  due 
course  ;  but  when  it  is  shown  that  the  title  of  any  person 
who  has  negotiated  the  instrument  was  defective,  the  bur- 
den is  on  the  holder  to  prove  that  he  or  some  person  under 
whom  he  claims  acquired  the  title  as  a  holder  in  due  course. 
But  the  last-mentioned  rule  does  not  apply  in  favor  of  a 
party  who  became  bound  on  the  instrument  prior  to  the 
acquisition  of  such  defective  title. 
544 


ARTICLE   VI. 

LIABILITIES  OF  PARTIES. 

Section  110.  Liability  of  maker. 

111.  Liability  of  drawer. 

112.  Liability  of  acceptor. 

113.  When  person  deemed  indorser. 

114.  Liability  of  irregular  indorser. 

116.  Warranty;  where  negotiation  by  delivery,  et  cetera. 

116.  Liability  of  general  indorsers. 

117.  Liability  of  indorser  where  paper  negotiable  by  delivery. 

118.  Order  in  which  indorsers  are  liable. 

119.  Liability  of  agent  or  broker. 

§  110  (§  60).  Liability  of  maker. —  The  maker  of  a 
negotiable  instrument  by  making  it  engages  that  he  will 
pay  it  according  to  its  tenor;  and  admits  the  existence  of 
the  payee  and  his  then  capacity  to  indorse. 

§  111  (§  61).  Liability  of  drawer. —  The  drawer  by 
drawing  the  instrument  admits  the  existence  of  the  payee 
and  his  then  capacity  to  indorse  ;  and  engages  that  on  due 
presentment  the  instrument  will  be  accepted  and  paid,  or 
both,  according  to  its  tenor,  and  that  if  it  be  dishonored, 
and  the  necessary  proceedings  on  dishonor  be  duly  taken, 
he  will  pay  the  amount  thereof  to  the  holder,  or  to  any 
subsequent  indorser  who  may  be  compelled  to  pay  it. 
But  the  drawer  may  insert  in  the  instrument  an  express 
stipulation  negativing  or  limiting  his  own  liability  to  the 
holder. 

35  545 


ART.  VI.  THK    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

§  112  (§  62).  Liability  of  acceptor. —  The  acceptor  l>y 
accepting  the  instrument  engaj^es  thut  he  will  pay  it  accord- 
ing to  the  tenor  of  his  acceptance  and  admits  : — 

1.  The  existence  of  the  drawer,  the  genuineness  of  his 
sign;iture,  and  his  capacity  and  authority  to  draw  the  in- 
strument; and 

2.  The  existence  of  the  payee  and  his  then  capacity  to 
indorse. 

§  113  (§  63).  When  person  deemed  indorser. —  A 
person  placing  his  signature  upon  an  instrument  otherwise 
than  as  maker,  drawer  or  acceptor  is  deemed  to  be  an  in- 
dorser, unless  he  clearly  indicates  by  appropriate  words  his 
intention  to  be  bound  in  some  other  capacity. 

§  114  (§  64).  Liability  of  irregular  indorser. —  Where 
a  person,  not  otherwise  a  party  to  an  instrument,  places 
thereon  his  signature  in  blank  before  delivery,  he  is  liable 
as  indorser  in  accordance  with  the  following  rules;  — 

1.  If  the  instrument  is  payable  to  the  order  of  a  third 
person,  he  is  liable  to  the  payee  and  to  all  subsequent 
parties. 

2.  If  the  instrument  is  payable  to  the  order  of  the  maker 
or  drawer,  or  is  payable  to  bearer,  he  is  liable  to  all  parties 
subsequent  to  the  muker  or  drawer. 

3.  If  he  signs  for  the  accommodation  of  the  payee,  he  is 
liable  to  all  parties  subsequent  to  the  payee. 

§  115  (§  65).  Warranty  where  negotiation  by  delivery, 
et  cetera. —  Every  person  negotiating  an  instrument  by 
delivery  or  by  a  qualified  indorsement,  warrants:  — 

1.  That  the  instrument  is  genuine  and  in  all  respects  what 
it  purports  to  be  ; 
546 


APP.]  LIABILITIES    OF    PARTIES.  ART.  VI. 

2.  That  he  has  a  good  title  to  it; 

3.  That  all  prior  parties  had  capacity  to  contract; 

4.  That  he  has  no  knowledge  of  any  fact  which  would 
impair  the  validity  of  the  instrument  or  render  it  value- 
less. 

But  when  the  negotiation  is  by  delivery  only,  the  war- 
ranty extends  in  favor  of  no  holder  other  than  the  imme- 
diate transferee.  The  provisions  of  subdivision  three  of 
this  section  do  not  apply  to  persons  negotiating  public  or 
corporate  securities,  other  than  hills  and  notes. 

§  116  (§  (56).  Liability  of  general  indorser. —  Every 
indorser  who  indorses  without  qualification,  warrants  to  all 
subsequent  holders  in  due  course:  — 

1.  The  matter  and  things  mentioned  in  subdivisions 
one,  two  and  three  of  the  next  preceding  section  ;  and, 

2.  That  the  instrument  is  at  the  time  of  his  indorsement 
vali<l  and  subsisting. 

And,  in  addition,  he  engages  that  on  due  presentment, 
it  shall  be  accei)ted  or  paid,  or  both,  as  the  case  may  be, 
according  to  its  tenor,  and  that  if  it  be  dishonored,  and  the 
ncce!?sary  proceedings  on  dishonor  be  duly  taken,  he  will 
pay  the  amount  thereof  to  the  holder,  or  to  any  subse- 
quent indorser  who  may  be  compelled  to  pay  it. 

§  117  (§  67).  Ijiability  of  indorser  where  paper  nego- 
tiable by  delivery. —  Where  a  person  places  his  indorsement 
on  an  instrument  negotiable  by  delivery  he  incurs  all  the 
liabilities  of  an  indorser. 

§  118  (§  68).  Order  in  which  indor.sers  arc  liable. — 
Ah  respects  one  another,  iiidorsers  arc  liable  prima  facie  in 
the  order  in  which  they  indorse;  but  evidence  is  admissible 

547 


ART.  VI.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [APP. 

to  show  that  as  between  or  among  themselves  they  have 
agreed  otherwise.  Joint  payees  or  joint  indorsees  who 
indorse  are  deemed  to  indorse  jointly  and  severally. 

§  119  (§  69).  Liability  of  agent  or  broker. —  Where  a 
broker  or  other  agent  negotiates  an  instrument  without 
indorsement,  he  incurs  all  the  liabilities  prescribed  by  sec- 
tion one  hundred  and  fifteen  of  this  act,  unless  he  discloses 
the  name  of  his  principal,  and  the  fact  that  he  is  acting 
only  as  agent. 
548 


ARTICLE   VII. 

PRESENTMENT  FOR  PAYMENT. 

Section  130.  Effect  of  want  of  demand  on  principal  debtor. 

131.  Presentment  where  instrument  is  not  payable  on  demand. 

132.  Wliat  constitutes  a  sufficient  presentment. 

133.  Place  of  presentment. 

134.  Instrument  must  be  exliibited. 

135.  Presentment  where  instrument  payable  at  bank. 

136.  Presentment  where  principal  debtor  is  dead. 

137.  Presentment  to  persons  liable  as  partners. 

138.  Presentment  to  joint  debtors. 

139.  When  presentment  not  required  to  charge  the  drawer. 

140.  When  presentment  not  required  to  charge  the  iudorser. 

141.  When  delay  in  making  presentment  is  excused. 

142.  When  presentment  may  be  dispensed  with. 

143.  When  instrument  dishonored  by  non-payment. 

144.  Liability  of  person  secondarily  liable,  when   instrument 

dishonored. 

145.  Time  of  maturity. 

146.  Time;  how  computed. 

147.  Rule  where  instrument  payable  at  bank. 

148.  What  constitutes  payment  in  due  course. 

§  130  (§  70).  Effect  of  want  of  demand  on  principal 
debtor. —  Presentment  for  payment  is  not  necessary  in 
order  to  charge  the  person  primarily  liable  on  the  instru- 
ment;  but  if  the  instrument  is,  by  its  terms,  payable  at  a 
special  place,  and  he  is  able  and  willing  to  pay  it  there  at 
maturity,  such  ability  and  willingness  are  equivalent  to  a 
tender  of  payment  upon  his  part.  But  except  as  herein 
otherwise  provided,  presentment  for  payment  is  necessary 
in  ordea-  to  charge  the  drawer  and  indorsers. 

549 


ART.  VII.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

§  131  (§  71).  Presentment  where  instrument  is  not 
payable  on  demand. —  Where  the  iostrument  is  not  pay- 
able on  demand,  presentment  must  be  made  on  the  day  it 
falls  due.  Where  it  is  payable  on  demand,  presentment 
must  be  made  within  a  reasonable  time  after  its  issue, 
except  that  in  the  case  of  a  bill  of  exchange,  presentment 
for  payment  will  be  sufficient  if  made  within  a  reasonable 
time  after  the  last  negotiation  thereof. 

§  132  (§  72).  What  constitutes  a  sufficient  present- 
ment.—  Presentment  for  payment,  to  be  sufficient,  must 
be  made  :  — 

1.  By  the  holder,  or  by  some  person  authorized  to 
receive  payment  on  his  behalf  ; 

2.  At  a  reasonable  hour  on  a  business  day; 

3.  At  a  proper  place  as  herein  defined; 

4.  To  the  person  primarily  liable  on  the  instrument,  or 
if  he  is  absent  or  inaccessible,  to  any  person  found  at  the 
place  where  the  presentment  is  made. 

§  133  (§  73).  Place  of  presentment.  —  Presentment 
for  payment  is  made  at  the  proper  place:  — 

1.  Where  a  place  of  payment  is  specified  in  the  instru- 
ment   and  it  is  there  presented ; 

2.  Where  no  place  of  payment  is  specified,  but  the 
address  of  the  person  to  make  payment  is  given  in  the 
instrument  and   it   is  there  presented ; 

3.  Where  no  place  of  payment  is  specified  and  no  address 
is  given  and  the  instrument  is  presented  at  the  usual  place 
of  business  or  residence  of  the  person  to  make  payment ; 

4.  In  any  other  case,  if  presented  to  the  person  to  make 
payment  wherever  he  can  be  found,  or  if  presented  at  his 
last  known  place  of  business  or  residence. 

550 


APP.]  PUESfcNTMKNT    FOR    PAYMKNT.  ART.   VII. 

§  134  (§  74).  Instrument  must  be  exhibited.  —  The 
instrument  must  be  exhibited  to  the  person  from  whom 
payment  is  demanded,  and  when  it  is  paid  must  be  deliv- 
ered up  to  the  party  paying  it. 

§  135  (§  75).  Presentment  where  instrument  payable 
at  bank. —  Where  the  instrument  is  payable  at  a  bank, 
presentment  must  be  made  during  banking  hours,  unless 
the  person  to  make  payment  has  no  funds  there  to  meet  it 
at  any  time  during  the  day,  in  which  case  presentment  at 
any  hour  before  the  bank  is  closed  on  that  day  is  suflScient. 

§  13G  (§76).  Presentment  where  principal  debtor  is 
dead. —  Where  the  person  primarily  liable  on  the  instru- 
ment is  dead,  and  no  place  of  payment  is  specified,  pre- 
sentment for  payment  must  be  made  to  his  personal  repre- 
sentative, if  such  there  be,  and  if,  with  the  exercise  of 
reasonable  diligence,  he  can  be  found. 

§  137  (§  77).  Presentment  to  persons  liable  as  part- 
ners.— Where  the  persons  primarily  liable  on  tlie  instrument 
are  liable  as  partners,  and  no  place  of  payment  is  specified, 
presentment  for  payment  may  be  made  to  any  one  of  them, 
even  though  there  has  been  a  dissolution  of  the  firm. 

§138  (§78).  Presentment  to  joint  debtors. —  Where 
there  are  several  persons  not  partners  primarily  liable  on 
the  instrument,  and  no  place  of  payment  is  specified, 
presentment  must  be  made  to  them  all. 

§  139  (§  79).  "When  presentment  not  required  to  charge 

the  drawer. —  Presentment  for  i)ayment  is  not  required  in 
order  to  charge  the  drawer  where  he  has  no  right  to  expect 
or  require  that  the  drawee  or  acceptor  will  {)ay  the  instru- 
ment. 

551 


ART.  VII.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

§  140  (§  80).  When  presentment  not  required  to  charge 

the  indorser. —  Presentment  for  payment  is  not  required  in 
order  to  charge  an  indorser  wiiere  tlae  instrument  was  made 
or  accepted  for  his  accommodation,  and  he  has  no  reason 
to  expect  that  the  instrument  will  be  paid  if  presented. 

§  141  (§81).   When    delay    in  making  presentment  is 

excused. —  Delay  in  making  presentment  for  payment  is 
excused  when  the  delay  is  caused  by  circumstances  beyond 
the  control  of  the  holder  and  not  imputable  to  his  fault, 
misconduct  or  negligence.  When  the  cause  of  delay  ceases 
to  operate,  presentment  must  be  made  with  reasonable 
diligence. 

§  142  (§  82).  When    presentment    may  be    dispensed 

with. —  Presentment  for  payment  is  dispensed  with:  — 

1.  Where  after  the  exercise  of  reasonable  diligence  pre- 
sentment as  required  by  this  act  cannot  be  made; 

2.  Where  the  drawee  is  a  fictitious  person; 

3.  By  waiver  of  presentment  expressed  or  implied. 

§  143  (§  83).  When  instrument  dishonored  by  non- 
payment.—  The  instrument  is  dishonored  by  non-payment 
when  : — 

1.  It  is  duly  presented  for  payment  and  payment  is  re- 
fused or  cannot  be  obtained  ;  or 

2.  Presentment  is  excused  and  the  instrument  is  overdue 
and  unpaid. 

§  144  (§  84).  Liability  of  persons  secondarily  liable, 
when  instrument  dishonored. —  Subject  to  the  provisions 
of  this  act,  when  the  instrument  is  dishonored  by  non- 
payment, an  immediate  right  of  recourse  to  all  parties 
secondarily  liable  thereon,  accrues  to  the  holder. 
552 


APP.]  PRESENTMENT   FOR    PAYMENT.  ART.  VII. 

§  145  (§  85).  Time  of  maturity. —  P>ery  negotiable 
instrument  is  payable  at  the  time  fixed  tlierein  without 
grace.  Wlien  the  day  of  maturity  falls  upon  Sunday,  or  a 
holiday,  the  instrument  is  payable  on  the  next  succeeding 
business  day.  Instruments  falling  due  on  Saturday  are  to  be 
presented  for  payment  on  the  next  succeeding  business  day, 
except  that  instruments  payable  on  demand  may,  at  the 
option  of  the  holder,  be  presented  for  payment  before  twelve 
o'clock  noon  on  Saturday  when  that  entire  day  is  not  a 
holiday. 

§  146  (§  86).  Time;  how  computed. — Where  the  inter- 
est is  payable  at  a  fixed  })eriod  after  date,  after  sight,  or 
after  the  happening  of  a  specified  event,  the  time  of  pay- 
ment is  determined  by  excluding  the  day  from  which  the 
time  is  to  begin  to  run,  and  by  including  the  date  of  pay- 
ment. 

§  147  (§  87).   Rule     where     instrument     payable     at 

bank. —  Where  the  instrument  is  made  payable  at  a  bank 
it  is  equivalent  to  an  order  to  the  bank  to  pay  the  same  for 
the  account  of  the  principal  debtor  thereon. 

§  148    (§88),    What     constitutes     payment     in     due 

course. —  Payment  is  made  in  due  course  when  it  is  made 
at  or  after  the  maturity  of  the  instrument  to  the  holder 
thereof  in  good  faith  and  without  notice  that  his  title  is 
defective. 

553 


ARTICLE  VIII. 

NOTICE  OF  DISHONOR. 

Section    160.  To  whom  notice  of  dishonor  must  be  given. 

161.  By  whom  given. 

162.  Notice  given  by  agent. 

163.  Effect  of  notice  given  on  behalf  of  holder. 

164.  Effect  where  notice  is  given  by  party  entitled  thereto. 

165.  When  agent  may  give  notice. 

166.  When  notice  sufficient. 

167.  Form  of  notice. 

168.  To  whom  notice  may  be  given. 

169.  Notice  where  party  is  dead. 

170.  Notice  to  partners. 

171.  Notice  to  persons  jointly  liable. 

172.  Notice  to  bankrupt. 

173.  Time  within  which  notice  must  be  given. 

174.  Where  parties  reside  in  same  place. 
176.  Where  parties  reside  in  different  places. 

176.  When  sender  deemed  to  have  given  due  notice. 

177.  Deposit  in  post-offlce,  what  constitutes. 

178.  Notice  to  subsequent  parties,  time  of. 

179.  When  notice  must  be  sent. 

180.  Waiver  of  notice. 

181.  Whom  affected  by  waiver. 

182.  Waiver  of  protest. 

183.  When  notice  dispensed  with. 

184.  Delay  In  giving  notice ;  how  excused. 

185.  When  notice  need  not  be  given  to  drawer^ 

186.  When  notice  need  not  be  given  to  indorser. 

187.  Notice  of  non-payment  where  acceptance  refused. 

188.  Effect  of  omission  to  give  notice  of  non-acceptance. 

189.  When  protest  need  not  be  made;  when  must  be  made. 

§  160  (§  89).   To   whom  notice  of   dishonor   must  be 
given. —  Except    as    herein    otherwise    provided,    when    a 
554 


APP.]  NOTICE    OF    DISHONOR.  AKT.  VIII. 

negotiable  instrument  has  been  dishonored  by  non-accept- 
ance or  non-payment,  notice  of  dishonor  must  be  given  to 
the  drawer  and  to  each  indorser,  and  any  drawer  or 
indorser  to  whom  such  notice  is  not  given  is  discharged. 

§  161  (§  90).  By  whom  given. —  The  notice  may  be 
given  by  or  on  behalf  of  the  holder,  or  by  or  on  behalf  of 
any  party  to  the  instrument  who  might  be  compelled  to 
pay  it  to  the  holder,  and  who,  upon  taking  it  up  would 
have  a  right  to  reimbursscment  from  the  party  to  whom  the 
notice  is  given. 

§  162  (§  91).  Notice  given  by  agent. —  Notice  of  dis- 
honor may  be  given  by  an  agent  either  in  his  own  name  or 
in  the  name  of  any  party  entitled  to  give  notice,  whether 
that  party  be  his  principal  or  not. 

§  163  (§  92).    Effect    of    notice    given    on   behalf   of 

holder. —  Where  notice  is  given  by  or  on  behalf  of  the 
holder,  it  inures  for  the  benefit  of  all  subsequent  holders 
and  all  prior  parties  who  have  a  right  of  recourse  against 
the  party  to  whom  it  is  given. 

§  164  (§  93).  Effect  where  notice  is  given  by  party 
entitled  thereto. — •  Where  notice  is  given  by  or  on  behalf 
of  a  party  entitled  to  give  notice,  it  inures  for  the  benefit 
of  the  holder  and  all  parties  subsequent  to  the  party  to 
whom  notice  is  given. 

§  165  (§  94).  When  agent  may  give  notice.  —  Where 
the  instrument  has  been  dishonored  in  the  hands  of  an  ngent, 
he  may  either  himself  give  notice  to  the  parties  liable 
thereon,  or  he  may  give  notice  to  his  principal.  If  he 
give  notice  to  his  principal,  he  must  do  so  within  the  same 
time  as  if  he  were  the  holder,  and  the  principal  upon  the 

555 


ART.  VIII.         THE   KEGOTIABLE   INSTRUMENTS   LAW.  [aPP. 

receipt  of  such  notice  has  himself  the  same  time  for  giving 
notice  as  if  the  agent  had  been  an  independent  holder. 

§  166  (§  95).  When  notice  sufficient.  —  A  written 
notice  need  not  be  signed,  and  an  insufficient  written  notice 
may  be  supplemented  and  validated  by  verbal  communi- 
cation. A  misdescription  of  the  instrument  does  not  vitiate 
the  notice  unless  the  party  to  whom  the  notice  is  given  is  in 
fact  misled  thereby. 

§  167  (§  96).  Form  of  notice. —  The  notice  may  be  in 
writing  or  merely  oral  and  may  be  given  in  any  terms  which 
sufficiently  identify  the  instrument,  and  indicate  that  it  has 
been  dishonored  by  non-acceptance  or  non-payment.  It 
may  in  all  cases  be  given  by  delivering  it  personally  or 
through  the  mails. 

§  168  (§  97).  To  whom  notice  maybe  given. —  Notice 
of  dishonor  may  be  given  either  to  the  party  himself  or  to 
his  agent  in  that  behalf. 

§  169  (§  98).  Notice  where  party  is  dead. —  When  any 
party  is  dead,  and  his  death  is  known  to  the  party  giving 
notice,  the  notice  must  be  given  to  a  personal  representa- 
tive if  there  be  one,  and  if,  with  reasonable  diligence,  he 
can  be  found.  If  there  be  no  personal  representative, 
notice  may  be  sent  to  the  last  residence  or  last  place  of 
business  of  the  deceased. 

§  170  (§  99).  Notice  to  partners. —  Where  the  parties 
to  be  notified  are  partners,  notice  to  any  one  partner  is 
notice  to  the  firm  even  though  there  has  been  a  dissolution. 

§  171  (§  100).   Notice  to  jierson.s  jointly  liable. — Notice 
to  joint  parties  who  are  not  partners  must  be  given  to  each 
556 


ATP,]  NOTICE    OF    DISHONOR.  AKT,  VIII. 

of  them,  unless  one  of   them  hiis  authority  to  receive  such 
notice  for  the  others. 

§  172  (§  101).  Notice  to  bankrupt. —  Where  a  party 
has  been  adjudged  a  bankrupt  or  an  insolvent,  or  has  made 
an  assignment  for  the  benefit  of  creditors,  notice  may  be 
given  either  to  the  party  himself  or  to  his  trustee  or 
assignee. 

§  173  (§  102).  Time  within  which  notice  must  be 
given. —  Notice  may  be  given  as  soon  as  the  instrument  is 
dishonored ;  and  unless  delay  is  excused  as  hereinafter 
provided,  must  be  given  within  the  times  fixed  by  this  act. 

§  174  (§  103).  Where  parties  reside  in  same  place. — 
Where  the  person  giving  and  the  person  to  receive  notice 
reside  in  the  same  place,  notice  must  be  given  within  the 
following  times:  — 

1.  If  given  at  the  place  of  business  of  the  person  to 
receive  notice,  it  must  be  given  before  the  close  of  busi- 
ness hours  on  the  day  following; 

2.  If  given  at  his  residence,  it  must  be  given  before  the 
usual  hours  of  rest  on  the  day  following; 

3.  If  sent  by  mail,  it  must  be  deposited  in  the  post-office 
In  time  to  reach  him  in  usual  course  on  the  day  following. 

§  175  (§  104).  Where  parties  reside  in  different 
places. —  Where  the  person  giving  and  the  jierson  to  re- 
ceive notice  reside  in  different  places,  the  notice  must  be 
given  within  the   following  times:  — 

1.  If  sent  by  mail,  it  must  be  deposited  in  the  post-office 
In  time  to  go  by  mail  the  day  following  the  day  of  dis- 
honor, or  if  there  be  no  mail  at  a  convenient  hour  on  that 
day,  by  the  next  mail  thoroaftcr. 

557 


ART.  VITI.         THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

2.  If  given  otherwise  than  through  the  post-office,  then, 
within  the  time  that  notice  would  have  been  received  in 
due  course  of  mail,  if  it  had  been  deposited  in  the  post- 
office  within  the  time  specified  in  the  last  subdivision. 

§  176  (§  105).   When  sender  deemed  to  have  given  due 

notice. —  Where  notice  of  dishonor  is  duly  addressed  and 
deposited  in  the  post-office,  the  sender  is  deemed  to  have 
given  due  notice,  notwithstanding  any  miscarriage  in  the 
mails. 

§  177  (§  106).  Deposit  in  post-office;  what  consti- 
tutes.—  Notice  is  deemed  to  have  been  deposited  in  the 
post-office  when  deposited  in  any  branch  post-office  or  in 
any  letter  box  under  the  control  of  the  post-office  depart- 
ment. 

§  178  (§  107).  Notice  to  subsequent  party  ;  time  of. — 
Where  a  party  receives  notice  of  dishonor,  he  has,  after 
the  receipt  of  such  notice,  the  same  time  for  giving  notice 
to  antecedent  parties  that  the  holder  has  after  the  dis- 
honor. 

§  179  (§  108).  Wliere  notice  must  be  sent. —  Where  a 
party  has  added  an  address  to  his  signature,  notice  of  dis- 
honor must  be  sent  to  that  address  ;  but  if  he  has  not 
given  such  address,  then  the  note  must  be  sent  as  fol- 
lows:— 

1.  Either  to  the  post-office  nearest  to  his  place  of  resi- 
dence, or  to  the  post-office  where  he  is  accustomed  to 
receive  his  letters;   or 

2.  If  he  live  in  one  place,  and  have  his  place  of  business 
in  another,  notice  may  be  sent  to  either  place;   or 

558 


APP.]  NOTICE    OF    DISHONOR.  ART.  VIII. 

3.  If  he  iri  sojourning  in  aiioUier  i)lace,  notice  may  be 
sent  to  the  phice  where  he  is  so  sojourning. 

But  where  the  notice  i.s  actually  received  by  the  parly 
within  the  time  specified  in  this  act,  it  will  be  sufficient, 
though  not  sent  in  accordance  with  the  requirements  of 
this  section. 

§  180  (§  109).  Waiver  of  notice. —  Notice  of  dishonor 
may  be  waived,  either  before  the  time  of  giving  notice  has 
arrived,  or  after  the  omission  to  give  due  notice,  and  the 
waiver  may  be  express  or  implied. 

§  181  (§  110).  Wliom  affected  by  waiver.  —  Where 
the  waiver  is  embodied  in  the  instrument  itself,  it  is  bind- 
ing upon  all  parties;  but  where  it  is  written  above  the 
signature  of  an  indorser,  it  binds  him  only. 

§  182  (§  111).  Waiver  of  protest. —  A  waiver  of  pro- 
test, whether  in  the  case  of  a  foreign  bill  of  exchange  or 
other  negotiable  instrument,  is  deemed  to  be  a  waiver  not 
only  of  a  formal  [)rotest,  but  also  of  presentment  and 
notice  of  dishonor. 

§  183    (§  112).   When     notice     is     dispensed     witli. — 

Notice  of  dishonor  is  dispensed  with  when,  after  the 
exercise  of  reasonable  ddigence,  it  cannot  be  given  to  or 
does   not  reach   the  parties   sought  to  be  charged. 

§  184  (§  113).  Delay  in  giving  notice;  liow  ex- 
cused.—  Delay  in  giving  notice  of  dishonor  is  excused 
when  the  delay  is  caused  by  circumstances  beyond  the  con- 
trol of  the  holder  and  not  imputal)le  to  his  default,  mis- 
conduct or  negligence.  When  the  cause  of  delay  ceases  to 
operate,  notice  must  be  given  with  reasonable  diligence. 

559 


ART.  VIII.        THE    NEGOTIABLE    INSTRUMENTS   LAW.  [aPP. 

§  185  (§  114).  When  notice  need  not  be  given  to 
drawer. —  Notice  of  dishonor  is  not  required  to  be  given  to 
the  drawer  in  either  of  the  following  cases  : — 

1.  Where  the  drawer  and  drawee  are  the  same  person; 

2.  Where  the  drawee  is  a  fictitious  person  or  a  person 
not  having  capacity  to  contract ; 

3.  Where  the  drawer  is  the  person  to  whom  the  instru- 
ment is  presented  for  payment ; 

4.  Where  the  drawer  has  no  right  to  expect  or  require 
that  the  drawee  or  acceptor  will  honor  the  instrument; 

5.  Where  the  drawer  has  countermanded  payment. 

§  186  (§  115).  When  notice  need  not  be  given  to  in- 
dorser. —  Notice  of  dishonor  is  not  required  to  be  given  to 
an  indorser  in  either  of  the  following  cases:  — 

1.  Where  the  drawee  is  a  fictitious  person  or  a  person 
not  having  capacity  to  contract,  and  the  indorser  was 
aware  of  the  fact  at  the  time  he  indorsed  the  instrument ; 

2.  Where  the  indorser  is  a  person  to  whom  the  instru- 
ment is  presented  for  payment ; 

3.  Where  the  instrument  was  made  or  accepted  for  his 
accommodation. 

§  187  (§  116).   Notice  of  non-payment  where  acceptance 

refused. —  Where  due  notice  of  dishonor  by  non-accept- 
:ince  has  been  given,  notice  of  a  subsequent  dishonor  by 
non-payment  is  not  necessary,  unless  in  the  meantime  the 
instrument  has  been  accepted. 

§  188  (§  117).   Effect    of    omission    to   give    notice    of 

non-acceptance. —  An  omission  to  give  notice  of  dishonor 
by  non-acceptance  does  not  prejudice  the  rights  of  a  holder 
in  due  course  subsequent  to  the  omission. 
5(50 


^^^0  NOTICE    OF    DISHONOR. 


ART.  VIII. 


§  189  (§  118).  When  protest  need  not  be  made  ;  when 
must  be  made.- Where  any  negotiable  instrument  has 
been  dishonored  it  may  be  protested  for  non-acceptance  or 
non-payment,  as  the  case  maybe;  hut  protest  is  not  re- 
quired,  except  in  the  case  of  foreign  bills  of  exchancre 

36  561 


ARTICLE   IX. 

DISCHARGE   OF  NEGOTIABLE  INSTRUMENTS. 

Section  200.  Instrument;  how  discharged. 

20 lo  When  persons  secondarily  liable  on,  discharged. 

202.  Right  of  party  who  discharged  instrument. 

203.  Renunciation  by  holder. 

204.  Cancellation;  unintentional;  burden  of  proof. 

205.  Alteration  of  instrument;  effect  of. 

206.  What  constitutes  a  material  alteration. 

§  200  (§  119).  Instrument;  hovv  discharged. —  A  nego- 
tiable instrument  is  discharged:  — 

1.  By  payment  in  due  course  by  or  on  behalf  of  the 
principal  debtor; 

2.  By  payment  in  due  course  by  the  party  accommo- 
dated, where  the  instrument  is  made  or  accepted  for 
accommodation ; 

3.  By  the  intentional  cancelhition  thereof  by  the  holder  ; 

4.  By  any  other  act  which  will  discharge  a  simple  con- 
tract for  the  payment  of  money  ; 

5.  When  the  principal  debtor  becomes  the  holder  of  the 
instrument  at  or  after  maturity  in  his  own  right. 

§  201  (§  120).   When    persons    secondarily    liable  on, 

discharged. —  A  person    secondarily  liable  on  the  instru- 
ment is  discharged : — 

1.  By  any  act  which  discharges  the  instrument ; 

2.  By  the  intentional  cancellation  of  his  signature  by  the 
holder  ; 

3.  By  the  discharge  of  a  prior  party ; 

4.  By  a  valid  tender  of  payment  made  by  a  prior  party ; 

562 


APP.]  DISCHARGE.  ART.  IX. 

5.  By  a  release  of  the  principal  debtor,  unless  the  hold- 
er's right  of  recourse  against  the  party  secondarily  liable  is 
expressly  reserved  ; 

6.  By  any  agreement  binding  upon  the  holder  to  extend 
the  time  of  payment  or  to  postpone  the  holder's  right  to 
enforce  the  instrument,  unless  the  right  of  recourse  against 
such  party  is  expressly  reserved. 

§  202  (§  121).  Right  of  party  who  discharges  instru- 
ment. —  Where  the  instrument  is  paid  by  a  party  second- 
arily liable  thereon,  it  is  not  discharged  ;  but  the  party  so 
paying  it  is  remitted  to  his  former  rights  as  regards  all 
prior  parties,  and  he  may  strike  out  his  own  and  all  subse- 
quent indorsements,  and  again  negotiate  the  instrument, 
except:  — 

1.  Where  it  is  payable  to  the  order  of  a  third  person, 
and  has  been  paid  by  the  drawer;  and 

2.  Where  it  was  made  or  accepted  for  accommodation, 
and  has  been  paid  by  the  party  accommodated. 

§  203  (§  122).  Renunciation  by  holder.  —  The  holder 
may  expressly  renounce  his  rights  against  any  party  to  the 
instrument,  before,  at  or  after  its  maturity.  An  absolute 
and  unconditional  renunciation  of  his  rights  against  the 
principal  debtor  made  at  or  after  the  maturity  of  the 
instrument,  discharges  the  instrument.  But  a  renunciation 
does  not  affect  the  rights  of  a  holder  in  due  course  without 
notice.  A  renunciation  must  be  in  writing,  unless  the 
instrument  is  delivered  up  to  the  person  primarily  liable 
thereon." 

§  204  (§  123).  Cancellation;  unintentional;  burden 
of  proof.  —  A  cancellation  made  unintentionally,  or  under 

563 


ART.  IX.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

a  mistake,  or  without  the  authority  of  tiie  hulder,  is  inoper- 
ative ;  but  where  an  instrument  or  any  signature  thereon 
appears  to  have  been  canceled,  the  burden  of  proof  lies  on 
the  party  who  alleges  that  the  cancellation  was  made  unin- 
tentionally, or  under  a  mistake,  or  without  authority. 

§  205  (§  124).  Alteration  of  instrument;   effect  of . — 

Where  a  negotiable  instrument  is  materially  altered  with- 
out the  assent  of  all  parties  liable  thereon,  it  is  avoided, 
except  as  against  a  party  who  has  himself  made,  authorized 
or  assented  to  the  alteration  and  subsequent  indorsers. 
But  when  an  instrument  has  been  materially  altered  and  is 
in  the  hands  of  a  holder  in  due  course,  not  a  party  to  the 
alteration,  he  may  enforce  payment  thereof  according  to 
its  original  tenor. 

§  206  (§  125).  What    constitutes    a    material    altera- 
tion,—  Any  alteration  which  changes:  — 

1.  The  date; 

2.  The  sum  payable,  either  for  principal  or  interest; 

3.  The  time  or  j^lace  of  payment ; 

4.  The  number  or  the  relations  of  the  parties; 

5.  The  medium  or  currency  in  which  payment  is  to  be 
made. 

Or  which  adds  a  place  of  payment  where  no  place  of  pay- 
ment  is  specified,  or  any  other  change  or  addition  which 
alters  the   effect  of  the  instrument   in  any   respect,  is  a 
material  alteration. 
564 


ARTICLE   X. 

BILLS  OF  EXCHANGE;   FORM  AND  INTERPRETATION. 

Section  210.  Bills  of  exchange  defined. 

211.  Bill  not  an  assignment  of  funds  In  bands  of  drawee. 

212.  Bill  addressed  to  more  than  one  drawee. 

213.  Inland  and  foreign  bills  of  exchange. 

214.  When  bill  may  be  treated  as  promissory  note. 

215.  Referee  in  case  of  need. 

§  210  (§  12(5).  Bill  of  exchange  defined. —  A  bill  of 
exchaiiije  is  an  unconditional  order  in  writing  addressed 
by  one  person  to  another,  signed  by  the  i)erson  giving  it, 
requiring  the  person  to  whom  it  is  addressed  to  pay  on 
demand  or  at  a  fixed  or  determinable  future  time  a  sum 
certain  in  money  to  order  or  to  bearer. 

§  211  (§  127).  Bill  not  an  assignment  of  funds  in 
hands  of  drawee. —  A  bill  of  itself  does  not  operate  as  an 
assignment  of  the  funds  in  the  hands  of  the  drawee  avail- 
able for  the  payment  thereof,  and  the  drawee  is  not  liable 
on  the  bill  unless  and  until  he  accepts  the  same. 

§  212  (§  128).  Bill  addressed  to  more  than  one 
drawee. —  A  bill  may  be  addressed  to  two  or  more  drawees 
jointly,  whether  they  are  partners  or  not ;  but  not  to  two 
or  more  drawees  in  the  alternative  or  in  succession. 

§  213  (§  12!)).   Inland  and  foreign  bills  of  exchange. — 

An  inland  bill  of  exchange  is  a  bill  which  is,  or  on  its  face 
purports  to  be,  both  drawn  and  payable  within  this  State. 
Any    other    bill    is   a    foreign   bill.     Unless    the    contrary 

565 


ART.   X,  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

appears  on  the  face  of  the  bill,  the  holder  may  treat  it  as 
an  inland  bill. 

§  214  (§  130).  When  bill  may  be  treated  as  promis- 
sory note. —  Where  in  a  bill  drawer  and  drawee  are  the 
same  person,  or  where  the  drawee  is  a  fictitious  person,  or 
a  person  not  having  capacity  to  contract,  the  holder  may 
treat  the  instrument,  at  his  option,  either  as  a  bill  of  ex- 
change or  a  promissory  note. 

§  215  (§  131).  Referee  in  case  of  need. —  The  drawer 
of  a  bill  and  any  indorser  may  insert  thereon  the  name  of 
a  person  to  whom  the  holder  may  resort  in  case  of  need, 
that  is  to  say,  in  case  the  bill  is  dishonored  by  non-accept- 
ance or  non-payment.  Such  person  is  called  the  referee  in 
case  of  need.  It  is  in  the  option  of  the  holder  to  resort 
to  the  referee  in  case  of  need  or  not  as  he  may  see  fit. 
566 


ARTICLE   XL 

ACCEPTANCE  OF  BILLS  OF  EXCHANGE. 

Section  220.  Acceptance,  how  made,  et  cetera. 

221.  Holder  entitled  to  acceptance  on  face  of  bill. 

222.  Acceptance  by  separate  instrument. 

223.  Promise  to  accept;  when  equivalent  to  acceptance. 

224.  Time  allowed  drawee  to  accept. 

225.  Liability  of  drawee  retaining  or  destroying  bilL 

226.  Acceptance  of  incomplete  bill. 

227.  Kinds  of  acceptances. 

228.  What  constitutes  a  general  acceptance, 

229.  Qualified  acceptance. 

230.  Rights  of  parties  as  to  qualified  acceptance. 

§  220  (§  132).  Acceptance  ;  how  made,  etcetera. —  The 
acceptance  of  a  bill  is  the  siguitication  by  the  drawee  of 
his  assent  to  the  order  of  the  drawer.  The  acceptance 
must  be  in  writing  and  signed  by  the  drawee.  It  must  not 
express  that  the  drawee  will  perform  his  promise  by  any 
other  means  than  the  payment  of  money. 

§  221  (§  133).   Holder  entitled  to  accei)tance  on  face 

of  bill. — The  holder  of  a  bill  presenting  the  same  for  ac- 
ceptance may  require  that  the  acceptance  be  written  on 
the  bill  and  if  such  request  is  refused,  may  treat  the  bill 
as  dishonored. 

§  222  (§  134.)  Acceptance  by  separate  instrument. — 
Where  an  acceptance  is  written  on  a  paper  other  than  the 
bill  itself,  it  does  not  bind  the  acceptor  except  in  favor  of 
a  person  to  whom  it  is  shown  and  who,  on  the  faith  thereof, 
receives  the  bill  for  value. 

5<)7 


AKT,  XI,  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

§  223  (§  135).   Promise  to  accept;  when  equivalent  to 

acceptance. —  An  unconditional  promise  in  writing  to  ac- 
cept a  bill  before  it  is  drawn  is  deemed  an  actual  acceptance 
in  favor  of  every  person  who,  upon  the  faith  thereof, 
receives  the  bill  for  value. 

§  224  (§  136).  Time  allowed  drawee  to  accept. —  The 
drawee  is  allowed  twenty-four  hours  after  presentment  in 
which  to  decide  whether  or  not  he  will  accept  the  bill;  but 
the  acceptance  if  given  dates  as  of  the  day  of  presentation. 

§  225  (§  137).  Liabilityof  drawee  retaining  or  destroy- 
ing- bill. —  Where  a  drawee  to  whom  a  bill  is  delivered  for 
acceptance  destroys  the  same,  or  refuses  within  twenty-four 
hours  after  such  delivery,  or  within  such  other  period  as 
the  holder  may  allow,  to  return  the  bill  accepted  or  non- 
accepted  to  the  holder,  he  will  be  deemed  to  have  accepted 
the  same. 

§  226  (§  138).  Acceptance  of  incomplete  bill. —  A  bill 
may  be  accepted  before  it  has  been  signed  by  the  drawer, 
or  while  otherwise  incomplete,  or  when  it  is  overdue,  or 
after  it  has  been  dishonored  by  a  previous  refusal  to  accept, 
or  by  non-payment.  But  when  a  bill  payable  after  sight 
is  dishonored  by  non-acceptance  and  the  drawee  subse- 
quently accepts  it,  the  holder,  in  the  absence  of  any 
different  agreement,  is  entitled  to  have  the  bill  accepted  as 
of  the  date  of  the  first  presentment. 

§  227  (§  139).  Kinds  of  acceptances. —  An  acceptance 
is  either  general  or  qualified.  A  general  acceptance  assents 
without  qualification  to  the  order  of  the  drawer.  A  qual- 
ified acceptance  in  express  terms  varies  the  effect  of  the 
bill  as  drawn, 
568 


APP.]  ACCEI'TANCE    OF   BILLS    OF    EXCHANGE.  ART.  XI. 

§  228  (§  140).  What  constitutes  a  general  accept- 
ance.—  All  acceptance  to  pay  at  a  particular  place  is  a 
general  acceptance  unless  it  expressly  states  that  the  bill  is 
to  be  paid  there  only  and  not  elsewhere. 

§  229  (§  141).  Qualified  acceptance. —  An  acceptance 
is  qualified,  which  i.s:  — 

1.  Conditional,  that  is  to  say,  which  makes  payment  by 
the  acceptor  dependent  on  the  fulfillment  of  a  condition 
therein  stated  ; 

2.  Partial,  that  is  to  say,  an  acceptance  to  pay  part  only 
of  the  amount  for  which  the  bill  is  drawn  ; 

3.  Local,  that  is  to  say,  an  acceptance  to  pay  part  only 
at  a  particular  place ; 

4.  Qualified  as  to  time  ; 

5.  The  acceptance  of  some  one  or  more  of  the  drawees, 
but  not  of  all. 

§  230  (  §  142).  Bights  of  parties  as  to  qualified  accept- 
ance.—  The  holder  may  refuse  to  take  a  qualified  accept- 
ance, and  if  he  does  not  obtain  an  unqualified  acceptance, 
he  may  treat  the  bill  as  dishonored  by  non-.acceptance. 
Where  a  qualified  acceptance  is  taken,  the  drawer  and 
indorsers  are  discharged  from  liability  on  the  bill,  unless 
they  have  expressly  or  impliedly  authorized  the  holder  to 
take  a  qualified  acceptance,  or  subsequently  assent  thereto. 
When  the  drawer  or  indorser  receives  notice  of  a  qualified 
acceptance,  he  must  within  a  reasonable  time  express  his 
dissent  to  the  holder,  or  he  will  be  deemed  to  have  assented 
thereto. 

569 


ARTICLE   XII. 

PRESENTMENT   OF   BILLS    OF    EXCHANGE    FOR   ACCEPTANCE. 

Section  240.  "When  presentment  for  acceptance  must  be  made. 

241.  When  failure  to  present  releases  drawer  and  indorser. 

242.  Presentment;  how  made. 

243.  On  what  days  presentment  may  be  made. 

244.  Presentment;  where  time  is  insufficient. 

245.  When  presentment  is  excused. 

246.  When  dishonored  by  non-acceptance. 

247.  Duty  of  holder  where  bill  not  accepted. 

248.  Rights  of  holder  where  bill  not  accepted. 

§  240  (§  143).  When  presentment  for  acceptance  must 
be  made. —  Presentment  for  accepttince  must  be  made; — 

1.  Where  the  bill  is  payable  after  sight,  or  in  any  other 
case  where  presentment  for  acceptance  is  necessary  in 
order  to  fix  the  maturity  of  the  instrument;  or 

2.  Where  the  bill  expressly  stipulates  that  it  shall  be 
presented  for  acceptance  ;  or 

3.  Where  the  bill  is  drawn  payable  elsewhere  than  at  the 
residence  or  place  of  business  of  the  drawee. 

In  no  other  case  is  presentment  for  acceptance  necessary 
in  order  to  render  any  party  to  the  bill  liable. 

§  241  (§  144).  When  failure  to  present  releases 
drawer  and  indorser. —  Except  as  herein  otherwise  pro- 
vided, the  holder  of  a  bill  which  is  required  by  the  next 
preceding  section  to  be  presented  for  acceptance  must 
either  present  it  for  acceptance  or  negotiate  it  within  a 
reasonable  time.  If  he  fails  to  do  so,  the  drawer  and  all 
indorsers  are  discharged. 
570 


API'.]         PRESENTMENT    OF    BILLS    OF    EXCHANGE.         ART.   XII. 

§  242  (§  145).  Presentment;  Low  made. —  Presentment 
for  iicceptance  must  be  made  by  or  on  behalf  of  the  holder 
at  a  reasonable  hour,  on  a  business  day,  and  before  the 
bill  is  overdue,  to  the  drawee  or  some  person  authorized  to 
accept  or  refuse  acceptance  on  his  behalf;   and 

1.  Where  a  bill  is  addressed  to  two  or  more  drawees 
who  are  not  partners,  presentment  must  be  made  to  them 
all,  unless  one  has  authority  to  accept  or  refuse  acceptance 
for  all,  in  which  case  presentment  may  be  made  to  him  only  ; 

2.  Where  the  drawee  is  dead,  presentment  may  be  made 
to  his  personal  representative; 

3.  Where  the  drawee  has  been  adjudged  a  bankrupt  or 
an  insolvent,  or  has  made  an  assignment  for  the  benefit  of 
creditors,  presentment  may  be  made  to  him  or  to  his 
trustee  or  assignee. 

§  243  (§  146).   On     what    days    presentment    may    be 

made. —  A  bill  maybe  presented  for  acceptance  on  any 
day  on  which  negotiable  instruments  may  be  presented  for 
payment  under  the  provisions  of  sections  one  hundred  and 
thirty-two  and  one  hundred  and  forty-five  of  this  act.  When 
Saturday  is  not  otherwise  a  holiday,  presentment  for  accept- 
ance may  be  made  before  twelve  o'clock  noon  on  that  day. 

§  244  (§  147).  Presentment  where  time  is  insuffi- 
cient.—  Wheie  the  holder  of  a  bill  drawn  payable  else- 
where than  at  the  place  of  business  or  the  residence  of  the 
drawee  has  not  time,  with  the  exercise  of  reasonable  dili- 
gence, to  present  the  bill  for  acceptance  before  presenting 
it  for  payment  on  the  day  that  it  falls  duo,  the  delay 
caused  by  presenting  the  bill  for  acceptance  before  present- 
ing it  for  payment  is  excused  and  does  not  discharge  the 
drawers  and  indorsers. 

571 


ART.  XII.  THE    NEGOTIABLE    INSTRUMENTS   LAW.  [aPP. 

§  245  (§  148).  Where  presentment  is  excused. —  Pre- 
sentment for  acceptance  is  excused  and  a  bill  may  be 
treated  as  dishonored  by  non-acceptance  in  either  of  the 
following  cases  : — 

1.  Where  the  drawee  is  dead  or  has  absconded,  or  is  a 
fictitious  person,  or  a  person  not  having  capacity  to  con- 
tract by  bill; 

2.  Where  after  the  exercise  of  reasonable  diligence, 
presentment  cannot  be  made  ; 

3.  Where,  although  presentment  has  been  irregular, 
acceptance  has  been  refused  on  some  other  ground. 

§  24G  (§  149).  When  dishonored  by  non-acceptance. — 
A  bill  is  dishonored  by  non-acceptance:  — 

1.  When  it  is  duly  presented  for  acceptance,  and  such 
an  acceptance  as  is  prescribed  by  this  act  is  refused  or  can- 
not be  obtained  ;  or 

2.  When  presentment  for  acceptance  is  excused  and  the 
bill  is  not  accepted. 

§  247  (§  150).  Duty  of  holder  where  bill  not  ac- 
cepted.—  Where  a  bill  is  duly  presented  for  acceptance 
and  is  not  accepted  within  the  prescribed  time,  the  person 
presenting  it  must  treat  the  bill  as  dishonored  by  non- 
acceptance  or  he  loses  the  right  of  recourse  against  the 
drawer  and  indorsers. 

§  248  (§  151).  Bights  of  holder  where  bill  not  ac- 
cepted.—  When  a  bill  is  dishonored  by  non-acceptance, 
an  immediate  right  of  recourse  against  the  drawers  and 
indorsers  accrues  to  the  holder  and  no  presentment  for 
payment  is  necessary. 
572 


ARTICLE   XIII. 

PROTEST  OF  BILLS  OF  EXCHANGE. 

Section  260.  In  what  cases  protest  necessary. 
2G1.  Protest;  how  made. 

262.  Protest;  by  whom  made. 

263.  Protest;  when  to  be  made. 

264.  Protest;  where  made. 

265.  Protest  both  for  non-acceptance  and  non-payment. 

266.  Protest  before  maturity  where  acceptor  insolvent. 

267.  When  protest  dispensed  with. 

268.  Protest;  where  bill  is  lost,  et  cetera. 

§  260  (§152).  Ill  what  cases  protest  necessary. — 
Where  a  foreign  bill  appearing  on  its  face  to  be  such  is 
dishonored  by  non-acceptance,  it  must  be  duly  protested 
for  non-acceptance,  and  where  such  a  bill  which  has  not 
previously  been  dishonored  by  non-acceptance  is  dishonored 
by  non-payment,  it  must  be  duly  protested  for  non-pay- 
ment. If  it  is  not  so  protested,  the  drawer  and  indorsers 
are  discharged.  Where  a  bill  does  not  appear  on  its  face 
to  be  a  foreign  bill,  protest  thereof  in  case  of  dishonor  is 
unnecessary. 

§  261  (§  153).  Protest;  how  made. —  The  protest  must 
be  annexed  to  the  bill,  or  must  contain  a  copy  thereof ,  and 
must  be  under  the  hand  and  seal  of  the  notary  making  it, 
and  must  specify:  — 

1.  The  time  and  place  of  presentment ; 

2.  The  fact  that  presentment  was  made  and  the  manner 
thereof ; 

573 


ART.  XIII.         THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

3.  The  cause  or  reason  for  protesting  the  bill ; 

4.  The  demand  made  and  the  answer  given,  if  any,  or 
the  fact  that  the  drawee  or  acceptor  could  not  be  found. 

§  262  (§  154).  Protest;  by  wliom  made. —  Protest  may 
be  made  by;  — 

1.  A  notary  public;   or 

2.  By  any  respectable  resident  of  the  place  wher3  the  bill 
is  dishonored,  in  the  presence  of  two  or  more  credible 
witnesses. 

§  263  (§  155).  Protest;  when  to  be  made. —  When  a 
bill  is  protested,  such  protest  must  be  made  on  the  day  of  its 
dishonor,  unless  delay  is  excused  as  herein  provided. 
When  a  bill  has  been  duly  noted,  the  protest  may  be  sub- 
sequently extended  as  of  the  date  of  the  noting. 

§  264  (§  156).  Protest;  where  made. —  A  bill  must  be 
protested  at  the  place  where  it  is  dishonored,  except  that 
when  a  bill  drawn  payable  at  the  place  of  business  or  resi- 
dence of  some  person  other  than  the  drawee,  has  been  dis- 
honored by  non-acceptance,  it  must  be  protested  for  non- 
payment at  the  pliice  where  it  is  expressed  to  be  payable, 
and  no  further  presentment  for  payment  to,  or  demand  on, 
the  drawee  is  necessary. 

§  265  (§  157).  Protest  both  for  non-acceptance  and 
non-payment. —  A  bill  which  has  been  protested  for  non- 
acceptance  maybe  subsequently  protested  for  non-payment. 

§  266  (§  158).   Protest  before  maturity  where  acceptor 

insolvent. —  Where  the  acceptor  has  been  adjudged  a  bank- 
rupt or    an  insolvent  or  has  made  an  assignment  for  the 
benefit   of   creditors,  before  the  bill  matures,  the  holder 
574 


APP.]  PROTEST   OF   BILLS    OF   EXCHANGE.  ART.  XIII. 

may  cause  the  bill  to  be  protested  for  better  security 
against  the  drawer  and  indorsers. 

§  267  (§  159).  When  protest  dispensed  with. —  Protest 
is  dispensed  with  by  any  circumstances  which  would  dis- 
pense with  notice  of  dishonor.  Delay  in  noting  or  protest- 
ing is  excused  when  delay  is  caused  by  circumstances 
beyond  the  control  of  the  holder  and  not  imputable  to  his 
default,  misconduct,  or  negligence.  When  the  cause  of 
delay  ceases  to  operate,  the  bill  must  be  noted  or  protested 
with  reasonable  diligence. 

§  268  (§  160).   Protest  where  bill  is  lost,  et  cetera. — 

Where  a  bill  is  lost  or  destroyed  or  is  wrongly  detained 
from  the  person  entitled  to  hold  it,  protest  may  be  made 
on  a  copy  or  written  particulars  thereof. 

575 


ARTICLE   XIV. 

ACCEPTANCE  OF  BILLS  OF  EXCHANGE  FOR  HONOR. 

Section  280.  When  bill  may  be  accepted  for  honor. 

281.  Acceptance  for  honor;  how  made. 

282.  When    deemed    to    be    an    acceptance  for  honor  of    the 

drawer. 

283.  Liability  of  acceptor  for  honor. 

284.  Agreement  of  acceptor  for  honor. 

285.  Maturity  of  bill  payable  after  sight;  accepted  for  honor. 

286.  Protest  of  bill  accepted  for  honor,  et  cetera. 

287.  Presentment  for  payment  to    acceptor   for   honor;    how 

made. 

288.  When  delay  in  making  presentment  is  excused. 

289.  Dishonor  of  bill  by  acceptor  for  honor. 

§  280  (§  161).  When  bill  may  be  accepted  for 
honor. —  Where  a  bill  of  exchange  has  been  protested  for 
dishonor  by  non-acceptance  or  protested  for  better  security 
and  is  not  overdue,  any  person  not  being  a  party  already 
liable  thereon,  may,  with  the  consent  of  the  holder,  inter- 
vene and  accept  the  bill  supra  protest  for  the  honor  of  any 
party  liable  thereon  or  for  the  honor  of  the  person  for 
whose  account  the  bill  is  drawn.  The  acceptance  for  honor 
may  be  for  part  only  of  the  sum  for  which  the  bill  is 
drawn ;  and  where  there  has  been  an  acceptance  for  honor 
for  one  party,  there  may  be  a  further  acceptance  by  a 
different  person  for  the  honor  of  another  party. 

§  281  (§  162).  Acceptance  for  honor;  how  made. —  An 
acceptance  for  honor  supra  protest  must  be  in  writing  and 
576 


APP.]  ACCEPTANCE.  ART.  XIV. 

indicate  tliat  it  is  an  acceptance  for  honor,  and  must  be 
signed  by  the  acceptor  for  honor. 

§  282  (§  1(53).  When  deemed  to  be  an  acceptance  for 
honor  of  the  drawer. —  "Where  an  acceptance  for  honor 
does  not  expressly  state  for  whose  honor  it  is  made,  it  is 
deemed  to  be  an  acceptance  for  the  honor  of  the  drawer. 

§  283  (§  164).   Liability  of  acceptor  for  honor. —  The 

acceptor  for  honor  is  liable  to  the  holder  and  all  parties  to 
the  bill  subsequent  to  the  party  for  whose  honor  he  has 
accepted. 

§  284  (§  164).  Agreement   of    acceptor   for   honor. — 

The  acceptor  for  honor  by  such  acceptance  engages  that 
he  will  on  due  presentment  pay  the  bill  according  to  the 
terms  of  his  acceptance,  provided  it  shall  not  have  been 
paid  by  the  drawee,  and  provided  also  that  it  shall  have 
been  duly  presented  for  payment  and  protested  for  non- 
payment and  notice  of  dishonor  given  to  him. 

§  285  (§  166).  Maturity  of  bill  payable  after  sight; 
accepted  for  honor. —  Where  a  bill  payable  after  sight  is 
accepted  for  honor,  its  maturity  is  calculated  from  the 
date  of  the  noting  for  non-acceptance  and  not  from  the 
date  of  the  acceptance  for  honor. 

§  286  (§  167).  Protest  of  bill  accepted  for  honor,  et 
cetera. —  Where  a  dishonored  bill  has  been  accepted  for 
honor  supra  protest  or  contains  a  reference  in  case  of  need, 
it  must  be  protested  for  non-payment  before  it  is  presented 
for  payment  to  the  acceptor  for  honor  or  referee  in  case  of 
need. 

87  577 


ART.  XIV.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [apP. 

§  287  (§  1(38).  Presentment  for  payment  to  acceptor 
for  honor;  how  made. —  Presentment  for  payment  to  the 
acceptor  for  honor  must  be  made  as  follows :  — 

1.  If  it  is  to  be  presented  in  the  place  where  the  protest 
for  non-payment  was  made,  it  must  be  presented  not  later 
than  the  day  following  its  maturity; 

2.  If  it  is  to  1)6  presented  in  some  other  place  than  the 
place  where  it  was  protested,  then  it  must  be  forwarded 
within  the  time  specified  in  section  one  hundred  and 
seventj-five. 

§  288  (§  169).   When   delay  in  making  presentment  is 

excused. —  The  provisions  of  section  one  hundred  and 
forty-one  apply  where  there  is  delay  in  making  present- 
ment to  the  acceptor  for  honor  or  referee  in  case  of  need. 

§  289   (§    170).   Dishonor     of     bill    by    acceptor    for 

honor. —  When  the  bill  is  dishonored  by  the  acceptor  for 
honor  it  must  be  protested  for  non-payment  by  him. 
578 


ARTICLE    XV. 

PAYMENT  OF  BILLS  OF  EXCHANGE  FOR  HONOR. 

Section  300.  Who  may  make  payment  for  honor. 

301.  Payment  for  honor;  how  made. 

302.  Declaration  before  payment  for  honor. 

303.  Preference  of  parties  offering  to  pay  for  honor. 

304.  Effect  on  subsequent  parties  where  bill  is  paid  for  honor. 

305.  "Where  holder  refuses  to  receive  payment  supra  protest. 

306.  Rights  of  payor  for  honor. 

§  300  (§  171).   Who  may  make  payment  for  honor. — 

Where  a  bill  has  been  protested  for  non-payment,  any  per- 
son may  intervene  and  pay  it  supra  protest  for  the  honor 
of  any  person  liable  thereon  or  for  the  honor  of  the  person 
for  whose  account  it  was  drawn. 

§  301  (§  172),   Payment  for  honor  ;  how   made. —  The 

));iyment  for  honor  supra  protest,  in  order  to  operate  as 
such  and  not  as  a  mere  voluntary  payment,  must  be 
attested  by  a  notarial  act  of  honor,  which  may  be 
appended  to  the  protest  or   form  an  extension  to  it. 

§  302  (  §  173).  Declaration  before  payment  for  honor. — 

The  notarial  act  of  honor  must  be  founded  on  a  declara- 
tion made  by  the  payor  for  honor  or  by  his  agent  in 
that  behalf  declaring  his  intention  to  pay  the  bill  for  honor 
and  for  whose  honor  he  pays. 

§  303  (§  174).  Preference  of  parties  offering  to  pay 
for  lionor. —  Where  two  or  more  persons  offer  to  pay  a 
bill  for    the  honor   of  different  parties,  the  person  whose 

579 


ART.  XV.  THE    NEGOTIABLE    INSTRUMENTS   LAW.  [aPP. 

payment  will  discharge  most  parties  to    the  bill  is   to  be 
given  the  preference. 

§  304  (§  175).  Effect  on  subsequent  parties  where  bill 
is  paid  for  honor. —  Where  a  bill  has  been  paid  for  honor, 
all  parties  subsequent  to  the  party  for  whose  honor  it  is  paid 
are  discharged,  but  the  payor  for  honor  is  subrogated  for, 
and  succeeds  to,  both  the  rights  and  duties  of  the  holder, 
as  regards  the  party  for  whose  honor  he  pays  and  all 
parties  liable  to  the  latter. 

§  305  (§  176).  Where  holder  refuses  to  receive  pay- 
ment supra  protest. —  Where  the  holder  of  a  bill  refuses 
to  receive  payment  supra  protest,  he  loses  his  right  of  re- 
course against  any  party  who  would  have  been  discharged 
by  such  payment. 

§  306  (§  177).   Rights  of  payor  for  honor. —  The  payor 
for  honor  on  paying  to  the  holder  the  amount  of  the  bill 
and  the  notarial  expenses  incidental  to  its  dishonor,  is  en- 
titled to  receive  both  the  bill  itself  and  the  protest. 
580 


ARTICLE   XVI. 

BILLS  IN  A  SET. 

Section  310.  Bills  in  sets  constitute  one  bill. 

311.  Rigtits  of  liolders  wliere  different  parts  are  negotiated. 

312.  Liability  of  holder  who  indorses  two  or  more  parts  of  a  set 

to  different  persons. 

313.  Acceptance  of  bills  drawn  in  sets. 

314.  Payment  by  acceptor  of  bills  drawn  in  sets. 

315.  Effect  of  discharging  one  of  a  set. 

§  310  ( §  178).  Bills  in  sets  constitute  one  bill. — 
Where  a  bill  is  drawn  in  a  set,  each  part  of  the  set  being 
numbered  and  containing  a  reference  to  the  other  parts,  the 
whole  of  the  parts  constitute  one  bill. 

§  311  (§  179).  Rights  of  holders  where  different  parts 
are  negotiated. —  Where  two  or  more  parts  of  a  set  are 
negotiated  to  different  holders  in  due  course,  the  holder 
whose  title  first  accrues  is  as  between  such  holders  the  true 
owner  of  the  bill.  But  nothing  in  this  section  affects  the 
rights  of  a  person  who  in  due  course  accepts  or  pays  the 
part  first  presented  to  him. 

§  312  (§  180).  Liiability  of  holder  who  indorses  two  or 
more  parts  of  a  set  to  different  persons. —  Where  the 
holder  of  a  set  indorses  two  or  more  parts  to  different  per- 
sons ho  is  liable  on  every  such  part,  and  every  indorscM- 
subsequent  to  him  is  liable  on  the  part  ho  has  himself  in- 
dorsed, as  if  such  parts  were  separate  bills. 

§  313  (§  181).  Acceptance  of  bills  drawn  in  sets. — 
The  acceptance  msiy  l)o  written  on  any  part  and  it  muijt  be 

581 


ART.  XVI.  THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

written  on  one  part  only.  If  the  drawee  accepts  more 
than  one  part,  and  such  accepted  parts  are  negotiated  to 
different  holders  in  due  course,  he  is  liable  on  every  such 
part  as  if  it  were  a  separate  bill. 

§  314  (§  182).  Payment  by  acceptor  of  bills  drawn  in 
sets. —  When  the  acceptor  of  a  bill  drawn  in  a  set  pays  it 
without  requiring  the  part  bearing  his  acceptance  to  be  de- 
livered up  to  him,  and  that  part  at  maturity  is  outstanding 
in  the  hands  of  a  holder  in  due  course,  he  is  liable  to  the 
holder  thereon. 

§  315  (§  183).   Effect  of    discharging  one  of  a  set. — 
Except  as  herein  otherwise  provided,  where  any  one  part 
of  a  bill  drawn  in  a  set  is  discharged  by  payment  or  other- 
wise the  whole  bill  is  discharged. 
582 


ARTICLE    XVII. 

PROMISSORY  NOTES  AND  CHECKS. 

Section  320.  Promissory  note  defined. 

321.  Check  defined. 

322.  Within  what  time  a  check  must  be  presented. 

323.  Certification  of  check  ;  effect  of. 

324.  Effect  where  holder  of  check  procures  it  to  be  certified. 

325.  When  check  operates  as  an  assignment. 

§  320  (§  184).  Promissory  note  defined. —  A  negotiable 
promissory  note  within  the  meaning  of  this  act  is  an  un- 
conditional promise  in  writing  made  by  one  person  to 
another  signed  by  the  maker  engaging  to  pay  on  demand 
or  at  a  fixed  or  determinable  future  time,  a  sum  certain  in 
money  to  order  or  to  bearer.  Where  a  note  is  dn.wn  to 
the  maker's  own  order,  it  is  not  complete  until  indorsed 
by  him. 

§  321  (§  185).  Check  defined, —  A  check  is  a  bill  of 
exchange  drawn  on  a  bank  payable  on  demand.  Except 
as  herein  otherwise  provided,  the  provisions  of  this  act 
applicable  to  a  bill  of  exchange  payable  on  demand  apply 
to  a  check. 

§  322  (  §  186  ).  Within  what  time  a  check  must  be  pre- 
sented.—  A  check  must  be  presented  for  payment  within 
a  reasonable  time  after  its  issue  or  the  drawer  will  be  dis- 
charged from  liability  thereon  to  the  extent  of  the  loss 
caused  by  the  delay, 

§323  (§187).   Certification     of     check;     effect    of. — 

Where  a  check  is  certified  bylhc  bank  on  which  it  is  drawn 
the  certification  is  equivalent  to  an  acceptance. 

583 


ART.  XVII.  THE    NEGOTIABLE    INSTRUiMENTS    LAW.  [aPP. 

§  324  (§  188).  Effect  where  the  holder  of  check  pro-- 
cures  it  to  be   certified. —  Where  the  holder    of  a  check 
procures  it  to  be  accepted  or  certified  the  drawer  and  all 
indorsers   are  discharged   from  liability  thereon. 

§  325  (§  189).  When  check  operates  as  an  assign- 
ment.—  A  check  of  itself  does  not  operate  as  an  assignment 
of  any  part  of  the  funds  to  the  credit  of  the  drawer  with 
the  bank,  and  the  bank  is  not  liable  to  the  holder,  unless 
and  until  it  accepts  or  certifies  the  check. 
584 


ARTICLE   XVril. 

NOTES    GIVEN    FOR    PATENT    RIGHTS    AND    FOR    A    SPECU- 
LATIVE   CONSIDERATION. 

Section  330.  Negotiable  instruments  given  for  patent  rights. 

331.  Negotiable   instruments  given   for  a    speculative    consid- 

eration. 

332.  How  negotiable  bonds  are  made  non-negotiable. 

§  330.  Negotiable  instruments  given  for  patent 
rights. —  A  promissory  note  or  other  negotiable  instrument, 
the  consideration  of  which  consists  wholly  or  partly  of  the 
right  to  make,  use  or  sell  any  invention  claimed  or  repre- 
sented by  the  vendor  at  the  time  of  sale  to  be  patented, 
must  contain  the  words  "  given  for  a  patent  right  "  prom- 
inently and  legibly  written  or  printed  on  the  face  of  such 
note  or  instrument  above  the  signature  thereto  ;  and  such 
note  or  instrument  in  the  hands  of  any  purchaser  or  holder 
is  subject  to  the  same  defenses  as  in  the  hands  of  the 
original  holder ;  but  this  section  does  not  apply  to  a 
negotiable  instrument  given  solely  for  the  purchase  price 
or  the  use  of  a  patented  article. 

§  331.  Negotiable  instrument  for  a  speculative 
consideration.  —  If  the  consideration  of  a  promissory 
note  or  other  negotiable  instrument  consists  in  whole 
or  in  part  of  the  purchase-price  of  any  farm  product, 
at  a  price  greater  by  at  least  four  times  than  the  fair 
market  value  of  the  same  product  at  the  time,  in  the 
locality,  or  of  the  membership  and  rights  in  an  association, 
company    or    combination   to    produce    or    sell    any    farm 

585 


ART.  XVIII.         THE    NEGOTIABLE    INSTRUMENTS    LAW.  [aPP. 

product  at  a  fictitious  rate,  or  of  a  contract  or  bond  to  pur- 
chase or  sell  any  farm  product  at  a  price  greater  by  four 
times  than  the  mari?et  value  of  the  same  product  at  the 
time  in  the  locality,  the  words,  "  given  for  a  speculative 
consideration,"  or  other  words  clearly  showing  the  nature 
of  the  consideration,  must  be  prominently  and  legibly 
written  or  printed  on  the  face  of  such  note  or  instrument 
above  the  signature  thereof,  and  such  note  or  instrument, 
in  the  hands  of  any  purchaser  or  holder,  is  subject  to  the 
same  defenses  as  in  the  hands  of  the  original  owner  or 
holder. 

§  332.  How  negotiable  bonds  are  made  non-nego- 
tiable.—  The  owner  or  holder  of  any  corporate  or  munici- 
pal bond  or  obligation  (except  such  as  are  designated  to 
circulate  as  money,  payable  to  bearer),  heretofore  or  here- 
after issued  in  and  payable  in  this  State,  but  not  registered 
in  pursuance  of  any  State  law,  may  make  such  bond  or 
obligation,  or  the  interest  coupon  accompanying  the  same, 
non-negotiable,  by  subscribing  his  name  to  a  statement 
indorsed  thereon,  that  such  bond,  obligation  or  coupon  is 
his  property ;  and  thereon  the  principal  sum  therein  men- 
tioned is  payable  only  to  such  owner  or  holder,  or  his  legal 
representatives  or  assigns,  unless  such  bond,  obligation  or 
coupon  be  transferred  by  indorsement  in  blank,  or  payable 
to  bearer,  or  to  order,  with  the  addition  of  the  assignor's 
place  of  residence. 
586 


ARTICLE   XIX. 

LAWS  REPEALED;    WHEN  TO  TAKE  EFFECT. 

Section  340.  Laws  repealed. 

341.  When  to  take  effect. 

§  340.  T^aws  repealed. —  The  laws  or  parts  thereof 
specified  in  the  schedule  hereto  annexed  are  hereby 
repealed. 

§  341.  When  to  take  effect.  —  This  chapter  shall  take 
effect  on  the  first  day  of  October,  eighteen  hundred  and 
ninety-seven. 

587 


INDEX. 


The  general  references  are  to  sections  of  the  text  of  the  treatise ;  the 
references  in  parentheses,  e.  g.  (184),  are  to  pages,  where  illustrative 
cases  are  found  printed  in  full;  and  the  references  niarljed  A,  e.  g.  A4, 
are  to  the  sections  of  the  Negotiable  Instruments  Law,  which  is  printed 
as  an  appendix. 


ACCEPTANCE, 

of  drafts  or  warrants  of  ofQcers  of  private  corporations,  46. 

imports  consideration,  50. 

the  object  and  effect  of  acceptance,  57  (188),  A112,  A220. 

when  and  in  what  cases  must  presentment  for  acceptance  be  made  — 

effect  of  failure,  58,  A187-189,  A240,  A241,  A246-A248. 
presentment  by  whom  and  to  whom,  59. 
where  and  at  what  time  must  presentment  be  made,  60  (184),  A4, 

A243. 
form  and  manner  of  presentment,  61,  A224,  A242. 
when  presentment  is  waived,  62,  147  (404). 
who  may  accept,  63,  A215. 

acceptance  before  and  after  completion  of  the  bill,  64,  A226. 
revocation  of  acceptance,  65  (102). 

acceptances  when  required  to  be  in  writing,  66,  A221,  A222. 
form  and  phraseology  of  acceptance,  67. 

implied  acceptances  — detention  or  destruction  of  bill,  68,  A225. 
agreement  to  accept,  69,  A223. 
conditional  acceptances,  70,  A227-A230. 

acceptances  for  honor  or  supra  protest,  71,  A280-A289,  A300-A306. 
what  acceptance  admits,  72. 
certified  notes,  73. 
exhibition  of  bill,  and  its  retention  by  drawee,  when   acquired  in 

presentment  for,  61. 
which  part  may  be  presented,  where  bill  is  executed  in  duplicate  or 

triplicate,  61. 
after  maturity,  64. 
on  separate  paper,  67,  A222. 
acceptance  defined.  A2. 
See  Excuses  for  Faii.uuk  of  Prf.sentmknt,  Protest  and  Notice. 

(5sn) 


INDEX. 

ACCEPTANCE  OF  PAPER, 
included  in  delivery, 
(see  delivery.) 

ACCEPTOR.    See  Acceptance. 

not  entitled  to  protest  or  notice,  92. 

not  discharged  by  failure  to  make  presentment  for  payment  on  day 

of  maturity,  1 14. 
not  discharged  by  want  of  notice  of  dishonor,  130. 

ACCIDENT, 

to  holder  or  paper,  as  an  excuse  for  failure  of  presentment,  protest 
and  notice,  145. 

ACCOMMODATION  PAPER, 
executed  by  partner,  41. 
executed  by  private  corporation,  43. 
real  and  apparent  relation  of  parties  as  against  bona  fide  holders,  52, 

161. 
same  consideration  may  support  obligation  of  principal  debtor  and 

accommodation  party,  53  (440). 
general  discussion  of,  54. 
rights  of  bona  fide  holder  to,  as  affected  by  transfer  before  or  after 

maturity,  107. 
knowledge  of,  how  far  affects  bona  fide  ownership,  111. 
See  Sureties  and  Guarantors. 

ACCOMMODATION  PARTIES, 
canceled  sureties  as,  161. 
payment  by,  179. 
See  Accommodation  Paper  and  Sureties  and  Guarantors. 

ADDRESS, 

ignorance   of,  as  an  excuse  for  failure  of  presentment  and  pro- 
test, 144. 

ADEQUACY, 

of  consideration  as  affecting  bona  fide  ownership,  as  constructive 
notice  of  fraud,  103. 

ADMINISTRATORS, 

as  parties,  49. 

presentment  for  acceptance  to,  59. 

presentment  for  payment  by,  115. 

presentment  for  payment  to,  117. 

notice  of  dishonor  by  and  to,  131,  132  (379). 

ADMISSIONS, 

from  acceptance,  72. 

AGENT, 

delivery  by,  26. 

power  of,  to  fill  up  blanks,  28,  96. 
execution  of  bill  or  note  by,  39,  A38,  A40, 
590 


INDEX. 

AGENT  —  Continued, 
signature  by,  40,  A40. 
liability  of,  on  bill  or  note,  39,  40,  A39. 
of  private  corporation,  43  (p.  115,  122,  125,  127). 
of  governments,  47. 

of  municipal  or  public  corporations.  48. 
presentment  for  acceptance  by,  and  to,  59,  63. 
authority  of,  to  indorse,  (227). 

Indorsee  for  collection  takes  only  as,  90,  (239"),  (244). 
paper  executed  in  blank,  and  wrongfully  filled  up  by,  9G,  (281). 
may  make  presentment  for  payment,  115. 

possession  of  paper,  proof  of  authority  to  present  for  payment,  116. 
presentment  for  payment  to,  117. 
may  give  notice  of  dishonor,  131,  A1G2,  A165. 
may  receive  notice  of  dishonor,  132. 

AGREEMENTS    CONTROLLING    THE   OPERATION  OF  BILLS  AND 
NOTES,  29-32,  A24. 
kinds  of  agreements,  29. 
what  memoranda  will  control,  30. 
collateral  agreements,  31. 
agreements  to  renew,  32. 

AGREEMENT  TO  ACCEPT,  G9. 

ALIEN  ENEMIES, 

as  parties  to  bills  aud  notes,  38. 

ALLONGE,  87. 

ALTERATIONS.     See  Forgery. 

AMBIGUITIES, 

in  instruments,  how  construed,  A36. 

AMBIGUOUS  INSTRUMENTS,  7,  A36. 

ANTECEDENT  DEBTS, 

when  a  sufficient  consideration,  56. 

ANTE-DATING, 

of  bills  and  notes,  8,  26,  A31. 

ASSIGNABILITY, 

of  choses  in  action,  74. 

and  negotiability  distinguished,  17,  107. 

ASSIGNABILITY  AND  NEGOTIABILITY, 

distinguished,  17,  107. 
ASSIGNMENT, 

by  bill  of  exchange,  5. 

by  check, 177,  (491). 
ASSIGNORS, 

of  paper  payable  to  bearer,  liability  of,  76. 

In  bankruptcy  or  insolvency, do  nut  take  in  usual  course  of  bu8!ne8a,106. 

591 


INDEX. 

ATTACHMENT, 
transfer  by,  81. 
not  usual  course  of  business,  106. 

ATTORNEY'S  FEES, 

stipulation  for,  how  afifects  negotiability,  21  (p.  56). 


BANK  OR  BANKER, 
defined,  A2. 

note  or  bill  payable  at,  17,  A147. 
See  Checks. 

BANKRUPT, 

as  party  to  bill  or  note,  37. 

BEARER, 

bill  and  notes  payable  to,  17,  A28. 
transfer  of,  75. 
liability  of  assignors  of,  76. 
defined,  A2. 

BILLS  AND  NOTES,  GENERAL  CHARACTERISTICS. 

what  is  money,  1. 

commercial  paper  defined,  2. 

bills  of  exchange  —  foreign  and  inland  bills,  3,  A2,  A210,  A213, 
A310-A315. 

forms  of  bills  of  exchange,  i,  A20. 

the  effect  of  a  bill  —  when  does  it  operate  as  an  equitable  assign- 
ment 5,  A211. 

promissory  notes  defined,  6,  A2,  A320. 

form  of  a  promissory  note,  7,  A20,  A36,  A214. 

BILLS,    NOTES    AND    CHECKS,    REQUISITES   AND  COMPONENT 
PARTS, 

the  date,  7,  A25,  A30,  A32. 
ante-dating  and  post-dating,  8,  A31,  26. 
name  of  drawer  or  maker  9  (p.  52),  A20,  AllO,  Alll. 
joint  and  several  notes,  10,  A36. 
two  or  more  drawers,  11. 

liability  of  one  or  more  joint  makers  or  drawers,  as  sureties,  12. 
the  name  of  the  drawee,  13  (p.  41),  A20,  A215. 
the  name  of  the  payee,  14. 
fictitious  or  non-existing  parties,  15,  A37. 
same  persons  as  different  parties,  16. 
words  of  negotiability,  17,  A20,  A27,  A28. 
a  distinct  obligation  to  pay,  18  (p.  54),  A20. 
time  of  payment,  19,  A20,  A23,  A26. 
payment  must  be  unconditional,  20,  A20,  A22. 
certainty  as  to  amount  of  payment,  21  (pp.  62,  56),  A21,  A36. 
payment  in  money  only,  22,  A25. 
the  place  of  payment,  23,  A25. 
592 


INDEX. 

BILLS,    NOTES    AND    CHECKS,    REQUISITES    AND    COMPONENT 
PARTS  —  Continued, 
acknowledgment  of  consideration,  24,  A25. 
sealed  instruments  not  negotiable,  25  (p.  62),  A25. 
delivery,  26,  A35. 
delivery  as  an  escrow,  27  (p.  68), 

delivery  of  bills  and  notes  executed  in  blank,  28,  A33,  96,  A34, 
agreements  controlling  operations  of,  29-32,  A24. 

kinds  of,  29. 

what  memoranda  will  control,  30  (pp.  68,  70,  73). 

collateral  agreements,  31. 

agreements  to  renew,  32. 
form  and  formalities  of  checks,  167. 
payment  by,  182,  183  (481),  (505),  (508). 

BILLS  OF  EXCHANGE, 

foreign  and  inland  bills,  3,  A210. 

forms  of,  4,  A214. 

effect  of,  5,  A211. 

distinguished  from  checks,  164-167. 

acceptance  of.     See  Acceptance. 

See  Bills  and  Notes. 

BLANK, 

delivery  of  instruments  executed  in,  2K,  96,  A33,  A34. 
effect  of,  in  statement  of  amount  of  money  (HI.  Cas.,  p.  52). 
acceptance  of  bill  executed  in,  64. 
indorsement  in,  89  (235). 

BLANK  SIGNATURE, 

bill  or  note,  written   over,  without  authority  —  right  of  bona  fide 
purchaser,  97. 

BONA  FIDE, 

what  is  meant  by,  101. 
See  Bona  Fidk  Holder. 

BON.\  FIDE    HOLDER, 

how  affected  by  flctltious  parties,  15. 
right  of,  in  case  of  escrow,  27. 

as  against  infant  party,  33. 

as  against  lunatics,  34. 

as  against  drunkards  and  spendthrifts,  35. 

as  against  married  women,  36. 

as  against  bankrupts  and  insolvents,  37. 

as  against  agent,  39. 

in  paper  of  partnership,  41. 

in  paper  of  private  corporations,  42. 

in  paper  of  municipal  corporations,  48. 

where  fiduciaries  and  personal  represi;ntatives  are  parties,  49. 

defense  of  consideration  against,  51  (162). 

not  affected  by  unreal  appearance  of  the  relation  of  parties,  52. 
:'.,s  5l>3 


INDEX. 

BONA  FIDE  HOLDER  —  Continued. 

may  enforce  accommodation  paper,  54  (158). 

will  antecedent  debt  be  sufficient  consideration  to  make  one 

a,  55. 
when  is  a  pledgee  a,  56. 

when  void  note  cannot  be  enforced  by,  (162). 
protected  from  defenses    growing  out  of   wrongful    filling  up  of 

blanks,  64. 
cannot  be  affected  by  revocation  of  acceptance,  65. 
how  affected  by  false  representations  of  drawer  (188). 
where  paper  payable  to  order  is  indorsed  subsequent  to  transfer  by 

delivery,  78. 
where  paper  payable  to  order  is  transferred  by  delivery,  78,  83,  89. 
as  affected  by  prior  sale  without  delivery,  79. 
not  affected  by  change  in  apparent  order  of  indorsement,  86. 
as  affected  by  restrictive  indorsement  and  its  cancellation,  90  (239). 
who   is  a   bona  fide  holder;    purchaser   from,  93,   107,   A80,   A91, 

A94. 
what  defenses  will  and  will  not  prevail  against  bona  fide  holders  — 

general  statement,  94  (275),  (283),  A93,  A95,  A96,  A97. 
instruments  void  for  want  of  delivery,  95. 
blank  instruments  delivered  to  agent  and  filled  up   in  violation  of 

instructions,  90  (281),  A34. 
bill  or  note  written  over  a  blank  signature,  97. 

bills  or  notes  executed   by   mistake    or    under    false   representa- 
tions, 98. 
bills  and  notes  executed  under  duress,  99. 
estoppel  as  affecting  defenses  as  against  bona  fide  holders,  100. 
what  is  meant  by  bona  fide,  101. 

bona  fide  holder  must  be  a  holder  for  value,  102  (283),  (285),  A52. 
when  inadequacy  of  price  constructive  notice  of  fraud,  103. 
inadequacy  of  price   for  indorsement  as  affected  by  laws  against 

usury,  104. 
inadequacy  of  price,  as  affecting  amount  which  may  be  recovered  of 

primary  obligor  and  indorser,  105. 
usual  course  of  business,  106  (285),  (290),  A91,  A92. 
transfer  before  and  after  maturity,  107  (294),  A80. 
paper  payable  on  demand  or  at  sight  when  overdue,  108. 
transfer  after  default  in  the  payment  of  installment  of  principal  or 

interest,  109. 
transfer  on  last  day  of  grace,  or  day  of  maturity,  110. 
actual  and  constructive  notice  of  defenses.  111,  A93,  A94. 
notice  by  lis  pendens,  112. 

burden  of  proof  as  to  bo7ia  Ude  ownership,  113,  A98. 
rights  of,  of  forged  or  altered  bill  or  note,  155,  A42. 
parol  evidence  to  prove  real  character  of  concealed  sureties,   as 

against,  161. 
what  will  discharge  sureties  and  guarantors  as  against,  162. 
rights  of,  in  regard  to  checks,  175,  176. 

594 


INDEX. 

BROKER, 

liability  of,  in  transfer  of  paper  by  delivery,  77,  A119. 

BURDEN  OF  PROOF, 

of  bona  fide  ownership,  113. 

of  right  to  receive  payment,  and  to  malie  presentment,  116. 

as  to  lime  of  alteration,  152. 


CERTIFICATE  OF  PROTEST,  128. 

CERTIFICATION, 
of  notes,  73. 
of  check,  does  not  change  requirements  of  transfer  to  make  bona  fide 

ownership  (290). 
of  checks,  generally  discussed,  168  (473),  (475). 

CHECKS, 

as  a  gift  causa  mortis,  82. 

transfer  of  certified,  unindorsed,  whether  it  gives  rights  of  bona  fide 

holder  (290). 
distinguished  from  bills  of  exchange,  164,  A321. 
are  drawn  on  a  bank  or  banker,  165. 
payable  on  demand  and  without  grace,  166. 
the  form  and  formalities  of,  167. 
certification  of,  168  (473),  (475),  A323,  A324. 
negotiation  and  transfer  of,  169. 
memorandum,  170. 

presentment,  notice  and  protest  of,  171. 
within  what  time  must  check  be  presented,  172  (478),  A322. 
presentment  of,  by  mail  and  by  deposit,  173  (491). 
what  will  excuse  failure  or  delay  in  demand  and  notice,  174. 
when  stale  or  overdue,  175. 
effect  of  death  of  drawer,  176. 

right  of  checkholder  to  sue  the  bank,  177  (491 ) ,  A325. 
payment  through  clearing  house  (481)  (508). 
payment  by,  183  (508),  (481). 

CLEARING  HOUSE, 

payment  through  (481). 
conditional  (508). 

COLLATERAL  AGREEMENTS, 

controlling  operation  of  bills  and  notes,  31  (pp.  70,  73). 

COLLATERAL  SECURITIES, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  146. 
surrender   of,   effect  on   liability  of   sureties    and  guarantors,  162 

(453;. 
See  Skcuritiks. 

COLLECTION. 

indorsement  for,  90  (239),  (244). 

595 


INDEX. 

COMMERCIAL  PAPER, 

defined,  2. 

COMPLETION, 

of  bill  after  acceptance,  64. 
See  Blank. 

CONDITIONAL  ACCEPTANCE,  70. 

CONDITIONAL  INDORSEMENT,  90. 

CONDITIONS, 

to  payment  and  time  of  payment,  19,  20. 

CONFLAGRATIONS, 

as  an  excuse  for  failure   of  presentment,  protest    and  notice,  141 

(394). 

CONFLICT  OF  LAWS, 

what  law  controls  construction  (324). 

CONSIDERATION, 

acknowledgment  of,  how  far  necessary  to  negotiability,  24,  50. 

'*  value  received  "  24,  50. 

necessary  to  support  agreements  controlling  operation  of  bills  and 
notes,  29-32. 

necessity  of  consideration  —  what  instruments  import  a  considera- 
tion, 50,  A50. 

between  whom  question  of  consideration  may  be  raised  —  bona  fide 
holders,  51  (158),  (275),  A52,  A54. 

real  and  apparent  relation  of  parties,  52. 

one  consideration  supporting  the  obligations  of  more  than  one,  53, 
A52. 

accommodation  paper,  54  (161),  A55. 

money  consideration  —  contemporary  loans,  future  advances  and 
existing  debts,  55  (156),  (283),  (285),  A51. 

when  is  a  pledgee  a  bona  fide  holder  for  value,  56  (295),  A53.^ 

indorsements  import,  50. 

not  necessary  between  acceptor  and  holder  (188). 

how  far  necessary  to  indorsement,  83. 

statement  of,  how  far  notice.  111. 

want  or  failure  of,  as  affecting  burden  of  proof  of  bona  fide  owner- 
ship, 113. 

CONSTRUCTIVE  NOTICE, 

of  fraud,  when  inadequacy  of  price  is,  103. 
of  defenses,  111. 
See  Notice. 

CONTEMPORARY  LOANS, 

a  suflScient  consideration,  55. 

CONTRIBUTION, 

liability  of  indorsers  for,  86. 
between  co-sureties,  1G3. 
596 


INDEX. 
CORPORATIONS.     See  Private  Curpokations;    Municipal  Copora- 

TIONS. 

COSTS  OF  COLLECTION, 

stipulation  for,  how  affects  negotiability,  21. 

CURRENCY. 

tlistinguislied  from  money,  22. 
payment  in,  destroys  negotiability,  22. 

CURTESY,  WORDS  OF, 

does  not  affect  negotiability,  18. 

DAMAGE, 

to  holder,  as  an  element  in  determining  the  necessity  of  present- 
ment, protest  and  notice,  148. 

DATE, 

its  necessity,  and  presumptions  as  to,  7,  A25,  A30,  A32. 

ante-dating,  post-dating,  8,  26,  A31. 

payment,  certain  time  after,  19. 

bills  payable  given  time  after,  when  presentment  for  acceptance 

must  be  made,  58. 
of  acceptance,  61,  67. 

of  dishonor  must  be  inserted  in  certificate  of  protest,  128. 
of  check,  167. 

DAYS  OF  GRACE,  119. 

not  allowed  in  checks,  166. 

DEATH, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  145. 

DEFENSES, 

against  bona  fide  holders,  in  general,  94. 

fraud,  94. 

forgery,  94. 

illegality,  94. 

incapacity  of  parties,  94, 
instruments  void  for  want  of  delivery,  95. 
blank  instruments  wrongfully  filled  up  by  agent,  96. 
instrumeut  wrongfully  written  over  blank  signature,  97. 
mistake  or  misrepresentation,  98. 
duress,  99. 

affected  by  estoppel,  100. 
burden  of  proof,  113. 

DELAY, 

in   transmission   by  mail  as  an  excuse  for  failure  of  presentment, 
protest  and  notice,  145. 

DELIVERY, 

essential,  26. 
defined,  A2. 

597 


INDEX. 

DELIVERY  —  Continued. 

presumption  as  to  time  of,  26. 

what  is  a  sufficient,  26  (p.  112). 

in  escrow,  27. 

of  bills  and  notes  executed  in  blank,  28. 

prevents  revocation  of  acceptance,  65  (192). 

except  when  procured  by  fraud  (192). 

transfer  by,  of  bills  and  notes  payable  to  bearer,  75. 

of  paper  indorsed  in  blanls,  75. 

of  paper  payable  to  order,  78,  106. 
liability  of  broker  in  transfer  by,  77. 
sale  of  paper  without,  79  (20G). 
essential  in  gift  causa  mortis,  82. 
essential  to  indorsement,  83. 
instrument  void  for  want  of,  bona  fide  holder,  95. 
essential  to  check,  176. 
time  of,  not  date,  considered,  as  to  bona  fide  holders,  175. 

DEMAND, 

payable  on,  and  certain  time  after,  19,  A26. 

bills  payable  on,  when  presentment  for  acceptance  must  be  made, 

58.(187). 
paper  payable  on  demand  is  overdue,  108,  175. 
checks  are  payable  on,  166. 

DEPOSIT, 

of  bill  or  note  in  bank,  good  presentment,  122  (319). 

DESTRUCTION  OF  BILL, 

by  drawee,  an  implied  acceptance,  68. 

or  note,  as  an  excuse  for  failure  of  presentment,  protest  and  notice, 

■    148. 

DETENTION  OF  BILL, 

by  drawee,  an  implied  acceptance,  68. 

DISHONOR, 

of  paper,  liability  of  assignors  of  paper  payable  to  bearer,  76. 
noting,  and  extending  protest,  127. 

DISTURBANCES,  POLITICAL  AND  SOCIAL, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,   141 
(394). 

DONATIO  MORTIS  CAUSA,  82. 

DRAFTS, 

of  officers  of  private  corporation,  46. 
See  Bills  of  Exchange. 

DRAWEE.     See  Acceptor,  Acceptance, 
name  of,  13  (41),  A215. 
effect  of  uncertainty,  13 
not  liable  until  acceptance,  57. 
598 


INDEX. 

DRAWEE  —  Continued. 

his  relation  to  bill  before  acceptance,  57. 

presentment  for  acceptance  on  two  or  more  drawees,  A212,  63,  59. 

in  case  of  death  of,  59. 
can  alone  accept,  63,  A215. 
false  representations  by  drawer  (188). 
how  affected  by  stipulation  of  place  of  payment  before  acceptance, 

118. 
rights  of  drawee  bank,  who  pays    check  on  forged  indorsements 

(420). 

DRAWER  OF  BILL  OR  CHECK, 
name,  9. 

two  or  more,  11. 
liability  as  surety,  12. 
what  is  a  sufficient  signature  (52). 

primary  obligor  before,  and  secondary  obligor  after  acceptance,  57. 
discharged  by  failure  to  present  for  acceptance,  58. 
false  representations  by  drawer  (188). 
discharged  by  failure  to   make  presentment  for  payment  on  day  of 

maturity,  114. 
failure  to  give  notice  of  dishonor,  discharges,  130,  132,  A187,  A188. 
not  entitled  to  notice,  where  he  had  no  right  to  expect  acceptance  or 

payment,  142  (396)  A139,  A140,  A185. 
effect  of  death  of,  176. 

DRUNKARDS, 

as  parties  to  bills  and  notes,  35.  » 

presentment  for  acceptance  where  drawees  are,  62. 

DRUNKENNESS, 

as  affecting  capacity  of  parties  to  bills  and  notes,  35. 
See  Drunkards. 

DUE-BILL, 

whether  negotiable,  18, 

DURESS, 

as  a  defense  against  bona  fide  holder,  99. 

EPIDEMICS, 

as  an  excuse  for  failure  of   presentment,   protest  and   notice,  141 
(394). 

EQUITABLE  DEFENSES, 

do  not  prevail  against  bona  fide  holder,  94. 
See  Dkfenses  and  Bona  Fidk  Holders. 

ESCROW, 

delivery  in,  27  (p.  63). 

ESTOPPEL, 

as  affecting  defenses  against  bona  fide  holders,  100. 

599 


INDEX. 

EVIDENCE, 

of  what  is  certificate  of  protest,  129. 

EXCHANGE, 

stipulation  for,  how  affects  negotiability,  21. 

EXCUSES  FOR  FAILURE  OF  PRESENTMENT,  PROTEST  AND 
NOTICE, 

war,   political  and   social  disturbances,  pestilence,  epidemics,  con- 

flagrations,  floods,  etc.,  141  (394),  A141,  A183. 
drawing  with  no  right  to  expect  acceptance  or  payment,  142  (396), 

A139,  A140,  A185,  A186. 
void  note,  143. 
ignorance  of  and  failure  to   discover  the  address  of  parties,  144, 

A141,  A142,  A183. 
sickness,  death  or  accident  to  holder  or  to  paper,  145,  A141,  A184. 
possession  of  security  by  drawer  or  indorser,  146. 
waiver  of  presentment,  protest  and  notice,  147  (404),  A142,  A180- 

A182. 
no  damage  to  holder — loss  or  destruction  of  the  instrument,  148, 

(442),  A2G8. 
in  the  case  of  checks,  171-174.     See  Checks. 
in  presentment  for  acceptance,  A245. 

EXECUTION, 

transfer  by,  81. 

not  usual  course  of  business,  106. 

EXECUTpRS,  * 

as  parties,  49  (p.  137). 
presentment  for  acceptance  to,  59. 
presentment  for  payment  by,  115. 
presentment  for  payment  to,  117. 
notice  of  dishonor  by  and  to,  131,  132  (379). 

EXISTING  DEBTS, 

when  a  sufficient  consideration,  55. 

EXONERATION, 

liability  of  indorsers  for,  86. 

EXTENDING  PROTEST,  127. 

EXTENSION  OF  TIME  OF   PAYMENT, 
efiEect  on  liability  of  indorsers,  84,  144. 

sureties  and  guarantors,  162  (442). 

drawer,  114. 
See  Indorsement  and  Presentment  for  Payment. 

FICTITIOUS  OR  NON-EXISTING  PARTIES, 

effect  on  rights  of  bona  fide  holders,  15  (111.  Cas.  p.  46). 

FIDUCIARY  PARTIES, 
to  bills  and  notes,  49. 

600 


INDEX. 

FIRM.     See  Partners. 

FLOODS, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  141  (394). 

FOUBEAUANCE  TO  SUE, 

when  a  sufficient  consideration  (156). 

FOREIGN  BILLS  OF  EXCHANGE,  3. 

FOREIGN  MONEY, 

payment  in,  destroys  negotiability,  22. 

FORGERY, 

liability  of  assignors  of  paper,  payable  to  bearer,  76. 

liability  of  indorsers,  84. 

as  a  defense  against  bona  fide  holder,  94,  A42. 

forgery  defined  and  explained,  149. 

forgery,  alteration  and  spoliation  distinguished,  150,  A204, 

the  effect  of  authorized  alterations,  151,  A205. 

presumption  as  to  time  of  alteration  and  burden  of  proof,  162. 

what  are  material  alterations,  153  (415),  A206. 

what  are  immaterial  alterations,  154  (416). 

rights  of  bona  fide  holder  of  forged  or  altered  bill  or  note,  155,  A42. 

recovery  of  money  paid  on  a  forged  bill  or  note,  136  (420). 
FRAUD, 

as  a  defense  to  note  (158). 

in  procurement  of  acceptance,  65  (192). 

liability  of  assignors  of  paper  payable  to  bearer,  76. 

liability  of  indorsers,  84. 

as  a  defense  against  bona  fide  holder,  94,  98. 

notice  of,  from  inadequacy  of  consideration,  103. 

as  affecting  burden  of  proof  of  bona  fide  ownership,  113. 

FUTURE  ADVANCES, 

a  sufficient  consideration,  55. 

GARNISHMENT, 

transfer  by,  81  (208). 
GIFT  CAUSA  MORTIS,  82. 
GOVERNMENTS, 

as  parties,  47. 
GRACE, 

days  of,  119. 
GUARANTOR, 

liability  of  irregular  indorser  as,  92. 

what  will  discharge,  1G2  (440),  (442),  (444),  (453). 

remedies  of,  163. 

See  Guaranty  and  Surktiks  and  Guarantors. 
GUARANTY, 

supported  by  what  consideration,  5.3  (440). 

601 


INDEX. 

GUARANTY  —  Continued. 

liability  of  irregular  indorser  as  guarantor,  92, 
form  and  requisites  of  a  guaranty,  158. 
as  an  appurtenant  to  a  bill  or  note,  159. 

demand  of  principal  debtor  and  notice  of  default,  when  necessary, 
160  (444). 

GUARDIANS, 
as  parties,  49. 

HOLDER, 

defined,  A2. 

See  Bona  Fide  Holder. 

HOLIDAYS,  120. 

day  of  maturity  falling  on,  A5. 

HONOR, 

acceptance  for,  71. 
what,  admits,  72. 
HOUR, 

of  day  for  presentment,  121  (332). 

HUSBAND, 

riglit  of,  in  wife's  bills  and  notes,  36. 

IGNORANCE  OF  ADDRESS, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  144. 

ILLEGALITY, 

of  consideration  as  against  bona  fide  holders,  51,  52,  94. 
liability  of  assignors  of  paper  payable  to  bearer,  76. 
liability  of  indorsers  for,  84. 
burden  of  proof  of  bona  fide  ownership,  113. 

IMPLICATION  OF  LAW, 

as  to  time  of  acceptance,  60. 

acceptance  by,  68. 

transfer  by,  80. 

as  to  order  of  indorsements,  86. 

as  to  time  of  indorsement,  91. 

in  cases  of  irregular  indorsements,  92. 

when  inadequacy  of  price  gives  notice  of  fraud  by,  103. 
IMPLIED  ACCEPTANCE,  68. 

IMPLIED  TRANSFER, 

of  bills  and  notes,  80. 
INADEQUACY, 

of  consideration,  as  affecting  bona  fide  ownership,  as  constructive 
notice  of  fraud,  103. 

as  affecting  laws  against  usury,  104. 

as  determining  amount  or  recovery  by  bona  fide  holder,  105. 

602 


INDEX. 

INCAPACITY  OF  PARTIES, 

liability  of  assignors  of  paper  payable  to  bearer,  76. 
liability  of  indorsers,  84. 
as  a  defense  against  bona  fide  holder,  94. 

See  Infants,  Lunatics,   Married  Women,  Drunkards,   Spend- 
thrifts, Alien  Enemies. 

IN  DORSA,  83. 

INDORSEMENT, 
defined,  A2. 

imports  consideration,  50. 

same  consideration  supporting  principal  obligation  and,  53. 
in  blank  makes  paper  payable  to  bearer,  75  (205),  AG5,  89. 
of  paper,  payable  to  order,  to  pass  legal  title,  78,  A79. 
the  meaning,  purpose  and  effect  of  indorsement,  83  (227),  A61,  A70. 
liability  of  an  indorser,  84,  A1I6,  A117,  A18G-A189. 
liability  of  indorser  "  without  recourse,"  85  (231). 
successive  indorsement  —  liability  for  contribution  and  exoneration, 

86  (235),  A119. 
the  place  for  indorsement  —  allonge,  87. 
form  of  the  indorsement,  88,  AGO,  A73. 
indorsements  iu  full  and  in  blank,  89  (235),  A63,  A64,  A65. 
absolute,  conditional  and  restrictive  indorsements,  90  (239),  (244J, 

A63,  AC6,  AC7,  AG8,  AG9. 
time  and  place  of  indorsement,  91,  A75,  A76. 
irregular  indorsements  —  joint  makers,  grantors,  indorsers,  92  (244), 

A36,  A113,  A114. 
cannot  be  partial,  83,  A62. 
of  checks, 1G9. 

by  infant  or  corporation,  A41. 
of  paper  payable  to  bearer,  83,  A70,  A 117. 
where  two  or  more  are  payees,  83,  A71. 
where  paper  is  made  payable  to  cashier,  44,  A72. 
where  name  is  raispelled,  A73. 
may  be  stricken  out,  84,  89,  90,  A78. 

INDORSER, 

discharged  by  failure  to  make  presentment  for  acceptance,  68. 

to  make  presentment  for  payment,  114. 

to  give  notice  of  dishonor,  130,  132  (373). 
possession  of  paper  by,  when  proof  of  ownership,  116. 
may  give  notice  of  dishonor,  when,  131. 
See  Indorsement,  Pkotkst,  Presentment  for  Payment,  Notice. 

INFANTS, 

as  parties  to  bills  and  notes,  33. 

rights  of,  as  against  bona  fide  holder,  33. 

as  agents,  39. 

presentment  for  acceptance,  where  drawees  are,  62. 

indorsement  by,  A41. 

603 


INDEX. 

INJURY, 

to  holder  or  paper,  as  au  excuse  for  failure  of  presentment,  protest 
and  notice,  145. 

INLAND  BILLS  OF  EXCHANGE,  3. 

no  protest,  in  absence  of  statute,  123  (364). 

INSANE, 

See  Lunatics. 

INSOLVENCY, 

of  primary  obligor,  liability  of  assignors  of  paper  payable  to  bearer, 

76. 
liability  of  indorser,  84. 

INSOLVENT, 

as  party  to  bill  or  note,  37. 

INSTRUMENT, 
defined,  A2. 

INSURRECTION, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  141 
(394). 

IRREGULAR  INDORSEMENTS,  92  (244). 

ISSUE, 

defined,  A2. 

JOINT  AND  SEVERAL  NOTES,  10. 

JUDGMENTS, 

stipulation  of  power  to  confess,  how  affects  negotiability,  21. 


LARCENY, 

of  bill  or  note,  right  of  bona  fide  purchaser,  95. 

LEGAL  HOLIDAYS,  120. 

as  affecting  time  allowed  lor  giving  notice  of  dishonor,  136. 

LEGAL  PROCESS, 
transfer  by,  81. 

LEGAL  TENDER, 

what  is,  22. 

payment  only  in,  22,  181  (513). 

LIABILITY, 

primary  and  secondary,  57  (188),  84,  A3. 

LIS  PENDENS, 
notice  by,  112. 

LOSS  OF  INSTRUMENT, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  148. 
604 


INDEX. 

LUNATICS, 

as  parlies  to  bills  and  notes,  34. 

contra  bona  Jide  holder,  34. 

presentment  for  acceptance  where  drawee  is  Insane,  62. 


MAIL, 

notice  of  dishonor  by,  135,  137,  138. 

delay  in  transmission  by,  as  an  excuse  for  failure  of  presentment, 

protest  and  notice,  145. 
presentment  by,  173  (491). 

MAKER  OF  NOTE, 

name,  signature  or  subscription,  9. 

liability  of  irregular  indorser  as,  92. 

not  entitled  to  protest  or  notice,  92. 

not  discharged  by  failure  to  make  presentment  on  day  of  maturity, 

114. 
not  discharged  by  want  of  notice  of  dishonor,  130. 

MALA   FIDE, 

what  is  meant  by,  101. 

MARRIED  WOMEN, 

us  parties  to  bills  and  notes,  30  (p.  107). 

as  agents,  39. 

presentment  for  acceptance  where  drawees  are,  62. 

MATURITY, 

acceptance  after,  64. 

transfer  before  and  after,  107. 

in  case  of  bills  and  notes  payable  ou  demand  or  at  sight,  108. 

transfer  after  default  in  payment  of  installment  of    principal  and 

interest,  109. 
transfer  on  last  day  of  grace,  or  on  day  of,  110. 
rights  of  indorsee  after  (294),  A5. 
presentment  for  payment  on  day  of,  114,  A145. 
computation  of  time  of  —  days  of  grace.  119,  120,  A5,  A146. 
accelerated  when  and  how  (324). 
when  check  stale  or  overdue,  175. 

MEMORANDUM  CHECKS,  170. 

MINORS.     See  Infants. 

MISREPRESENTATION, 

as  a  defense  to  note  (158). 
as  against  bona  fide  holder,  98. 

MISTAKE, 

as  a  defense  against  bona  fide  holder,  98. 

605 


INDEX. 

MONEY, 

defined  and  explained,  1,  22. 

distinguished  from  currency,  22. 

payment  only  in,  22,  181  (513). 

a  sufiicient  consideration,  55. 

paid  on  forged  bill  or  note,  recovery  of,  156  (420). 

MONTH, 

in  statement  of  time  of  payment  means  calendar  month,  19,  120. 

MUNICIPAL  CORPORATIONS, 

as  parties,  48. 

claims  of  bona  fide  holders,  48. 


NAME, 

of  drawer  or  maker,  9. 
of  drawee,  13. 
of  payee,  14. 

NEGLIGENCE, 

as  a  ground  of  liability  to  bona  fide  holder,  95. 

NEGOTIABILITY, 

as  affected  by  date  or  its  absence,  7,  8. 
uncertainty  of  drawer  or  maker,  9-12, 
drawee,  13. 
payee,  14. 
fictitious  or  non-existent  parties,  15. 
appearance  of  same  persons  as  different  parties,  16. 
want  of  words  of  negotiability,  17. 
distinct  obligations  to  pay,  18. 
uncertainty  as  to  time  of  payment,  19. 
payment,  because  conditional,  20. 
amount  of  payment,  21. 
kind  of  money  or  currency,  22. 
place  of  payment,  23. 
acknowledgment  of  consideration,  24. 
presence  of  seal,  25. 
delivery,  2G-28. 
affected  by  restrictive  indorsement,  90  (239),  (244),  A63,  A66,  A67, 

A69,  ATT. 
See  Bona  Fide  Holder,  Transfer  of  Bills  and  Notks,  Indorse- 
ment. 

NEGOTIABILITY  AND  ASSIGNABILITY, 
distinguished,  17,  107. 
as  affected  by  maturity  of  paper,  107. 

NEGOTIABILITY,  WORDS  OF, 

necessity  for  same,  17,  A27,  A28.  " 
(306 


INDEX. 

NEGOTIABLE  INSTRUMENTS  LAW,  THE, 

[The  Index  under  this  heading  Is  exclusively  to  the  appendix,  wherein  Is  found 
the  text  or  the  Negotiable  Instruments  Law,  which  has  been  enacted  in  a  number 
of  the  States.] 

general  provisions,  A 1-17  (preamble). 

form  and  interpretation  of  negotiable  instruments,  A22-42  CA1-A23;. 

consideration,  A50-55  (A24-A29). 

negotiation,  A60-80  (A30-A50). 

rights  of  holder,  A90-98  CA51-oD). 

liabilities  of  parties,  AI10-I19  (AGO-69). 

presentment  for  payment,  Al 30-148  (A70-88). 

notice  of  dishonor,  AlGO-189  (A89-1I8) 

discharge  of  negotiable  instruments,  A200-206  (AI19-126). 

bills  of  exchange;  form  and  interpretation,  A210-215  (A126-131). 

acceptance,  A220-230  (A132-142), 

presentment  for  acceptance,  A240-248  (A143-151). 

protest,  A260-268  (A152-1C0). 

acceptance  for  honor,  A280-289  (161-170). 

payment  for  honor,  A300-30G  (A171-177). 

bills  in  a  set,  A310-315  (A178-183). 

promissory  notes  and  checks,  A320-325  (A184-189). 

notes  given  for  a  patent  right  and  for  a  speculative  consideration, 

A330-332. 
laws  repealed,  when  to  take  effect,  A340-34I. 

Form  and  Interpretation, 

form  of  negotiable  instrument,  A20  (Al). 

certainty  as  to  sum;  what  constitutes,  A21  (A2). 

when  promise  is  unconditional,  A22  (A3). 

determinable  future  time;  what  constitutes,  A23  (A4). 

additional  provisions  not  affecting  negotiability,  A24  (A5). 

omissions;  seal;  particular  money,  A26  (AG). 

when  payable  on  demand,  A2G  (A7). 

when  payable  to  order,  A27  (A8). 

when  payable  to  bearer,  A28  (A9). 

terms  when  sufficient,  A29  (AlO). 

date,  presumption  as  to,  A30  (All). 

ante-dated  and  post-dated,  A31  (A12). 

when  date  may  be  inserted,  A32  (A13). 

blanks,  when  may  be  tilled,  A33  (A14). 

incomplete  instrument  not  delivered,  A34  (A15). 

delivery;  when  effectual;  when  presumed,  A35  (A16). 

construction  where  instrument  is  ambiguous,  A36  (A17). 

liability  of  person  signing  in  trade  or  assumed  name,  A37  (A18). 

signature  by  agent;  authority;  how  shown,  A38  (A19). 

liability  of  person  signing  as  agent,  et  cetera,  A39  (A20). 

signature  by  procuration;  effect  of,  A40  (A21) 

effect  of  indorsement  by  infant  or  corporation,  A41  (A22), 

forged  signature ;  effect  of,  A42  (A23). 

607 


INDEX. 

NEGOTIABLE  INSTRUMENTS  LAW,  THE  —  Continued. 
Consideration  of  Negotiablk  Instruments, 
presumption  of  consideration,  A50  (A24). 
what  constitutes  consideration,  A  51  (A25). 
what  constitutes  holder  for  value  A52  (A26). 
when  lien  on  instrument  constitutes  holder  for  value,  A53  (A27). 
effect  of  want  of  consideration,  A54  (A28). 
liability  of  accommodation  indorser,  A55  (A29). 

Negotiation, 

what  constitutes  negotiationj  AGO  (ASO). 

indorsement;  how  made,  A61  (A31). 

indorsement  must  be  of  entire  instrument,  A62  (A32). 

kinds  of  indorsement,  A63  (A33). 

special  indorsement;  indorsement  in  blanls,  A64:  (A34). 

blanls  indorsement;  how  changed  to  special  indorsement,  A65 

(A35). 
when  indorsement  restrictive,  A66  (A36). 

effect  of  restrictive  indorsement;  rights  of  indorsee,  A67  (A37). 
qualified  indorsement,  A68  (A38).  , 

conditional  indorsement,  A69  (A39) . 

indorsement  of  instrument  payable  to  bearer,  A70  (A40). 
indorsement  where  payable  to  two  or  more  persons,  A71  (A41). 
effect  of  instrument  drawn  or  indorsed  to  a  person  as  cashier, 

A72  (A42). 
indorsement  where  name  is  misspelled,  et  cetera,  A73  (A43). 
Indorsement  in  representative  capacity,  A74  (A44). 
time  of  indorsement;  presumption,  A75  (A45). 
place  of  indorsement;  presumption,  A76  (A46). 
continuation  of  negotiable  character,  A77  (A47). 
striking  out  indorsement,  A78  (A48). 
transfer  without  indorsement;  effect  of,  A79  (A49). 
when  prior  party  may  negotiate  instfument,  A80  (A50). 

Rights  of  Holders, 

rights  of  holder  to  sue;  payment,  A90  (A51). 

what  constitutes  a  holder  in  due  course,  A91  (A52). 

when  person  not  deemed  holder  in  due  course,  A92  (A53). 

notice  before  full  amount  paid,  A93  (A54) . 

when  title  defective,  A94  (A55). 

what  constitutes  notice  of  defect,  A95  (ASG). 

rights  of  holder  in  due  course,  A96  (A57). 

when  subject  to  original  defenses,  A97  (ASS). 

who  deemed  holder  in  due  course,  A98  (A59). 

Liabilities  of  Parties, 

liability  of  maker,  AllO  (A60). 

liability  of  drawer,  AllI  (A61). 

liability  of  acceptor,  Air2  (A62), 

when  person  deemed  indorser,  A113  (A63). 

608 


INDEX. 

NEGOTIABLE  INSTRUMENTS  LAW,  THE  — Continued, 
liability  of  irregular  indorser,  A114  (AG4). 

warranty;  where  negotiation  by  delivery,  et  cetera,  A 115  CA65). 
liability  of  general  indorsers,  AUG  (A66J. 
liability  of  indorser  where  paper  negotiable  by  delivery,  All 7 

(A67). 
order  in  which  indorsers  are  liable,  A118  (A68). 
liability  of  agent  or  broker,  A 119  (A69). 

Presentment  for  Payment, 

effect  of  want  of  demand  on  principal  debtor,  A130  (A70). 

presentment  where  instrument  is  not  payable  on  demand,  A131 
(A71). 

what  constitutes  a  sufficient  presentment,  A132  (A72). 

place  of  presentment,  A133  (A73). 

instrument  must  be  exhibited,  A134  (A74). 

presentment  where  instrument  payable  at  banli,  A135  (A75). 

presentment  where  principal  debtor  is  dead,  A136  (A7G). 

presentment  to  persons  liable  as  partners,  A137  (A77), 

presentment  to  joint  debtors,  A138  (A78). 

when  presentment  not  required  to  charge  the  drawer,  A139  (A79) . 

when  presentment  not  required  to  charge  the  indorser,  A 140 
(A80). 

when  delay  in  making  presentment  is  excused,  A141  (A81). 

when  presentment  may  be  dispensed  with,  A142  (A82). 

when  instrument  dishonored  by  non-payment,  A143  (A83). 

liability  of  person  secondarily  liable,  when  instrument  dishon- 
ored, A144  (A84). 

time  of  maturity,  A145  CA86). 

time;  how  computed,  AUG  (A86). 

rule  where  instrument  payable  at  bank,  A147  (A87). 

what  constitutes  payment  in  due  course,  A148  (A88). 

Notice  of  Disuonor, 

to  whom  notice  of  dishonor  must  be  given,  AIGO  (A89). 

by  whom  given,  AlGl  (■A90). 

notice  given  by  agent,  A162  (A91). 

effect  of  notice  given  on  behalf  of  holder,  A1G3  (A92), 

effect  where  notice  Is  given  by  party  entitled  thereto,  A1G4  (A93). 

when  agent  may  give  notice,  A165  (A94). 

when  notice  sufficient,  AIGG  (A96). 

form  of  notice,  A 167  (A96). 

to  whom  notice  may  be  given,  A168  (A97). 

notice  where  party  is  dead,  A1G9  (A98). 

notice  to  partners,  A17  0  (A99;. 

notice  to  persons  jointly  liable,  A171  (AlOO). 

notice  to  bankrupt,  A 172  (AlOl). 

time  within  which  notice  must  be  given,  AI73  (A102). 

where  parties  reside  in  same  place,  A174  (A103). 

where  parties  reside  in  different  places,  AMU  (A104). 

89  6oy 


INDEX. 

NEGOTIABLE  INSTRUMENTS  LAW,  THE  —  Continued. 

when  sender  deemed  to  have  given  due  notice,  A176  (A105). 

deposit  in  post-office,  what  constitutes,  A177  (A106). 

notice  to  subsequent  parties,  time  of,  A178  (^A107). 

when  notice  must  be  sent,  A179  (A108). 

waiver  of  notice,  A180  (A109). 

whom  affected  by  waiver,  A181  (AllO). 

waiver  of  protest,  A182  (AIll). 

when  notice  dispensed  with,  A183  (A112). 

delay  in  giving  notice;  how  excused,  A184  (A113). 

when  notice  need  not  be  given  to  drawer,  A185  (A114). 

when  notice  need  not  be  given  to  indorser,  A186  (A115). 

notice  of  non-payment  where  acceptance  refused,  A187  (A116). 

effect  of  omission  to  give  notice  of  non-acceptance,  A188  (A117). 

when  protest  need  not  be  made ;  when  must  be  made,  A189  (A118) . 

Discharge  of  Negotiable  Instruments, 
instrument;  how  discharged,  A200  (AllO). 
when  persons  secondarily  liable  on,  discharged,  A201  (A120), 
right  of  party  who  discharged  instrument,  A202  (A121). 
renunciation  by  holder,  A203  (A122). 

cancellation;  unintentional;  burden  of  proof,  A204  (A123). 
alteration  of  instrument;  effect  of,  A205  (A124). 
what  constitutes  a  material  alteration,  A206  (A126'). 

Bills  of  Exchange;  Form  and  Interpretation, 
bills  of  exchange  defined,  A210  (A126). 

bills  not  an  assignment  of  funds  in  hands  of  drawee,  A211  (A127) . 
bills  addressed  to  more  than  one  drawee,  A212  (A128). 
inland  and  foreign  bills  of  exchange,  A213  CA129). 
when  bill  may  be  treated  as  promissory  note,  A214  CA130). 
referee  in  case  of  need,  A215  (A131). 

Acceptance  of  Bills  of  Exchange, 

acceptance,  how  made,  et  cetera,  A220  (A  132). 

holder  entitled  to  acceptance  on  face  of  bill,  A221  (A133). 

acceptance  by  separate  instrument,  A222  (A134). 

promise  to  accept;  when  equivalent  to  acceptance,  A223  (A135). 

time  allowed  drawee  to  accept,  A224  (A136). 

liability  of  drawee  retaining  or  destroying  bill,  A225  (A137). 

acceptance  of  incomplete  bill,  A226  (A138). 

kinds  of  acceptances,  A227  (A139). 

what  constitutes  a  general  acceptance,  A228  (A140). 

qualified  acceptance,  A229  (A141). 

rights  of  parties  as  to  qualified  acceptance,  A230  (A142). 

Presentment  of  Bills  of  Exchange  for  Acceptance, 

when  presentment  for  acceptance  must  be  made,  A240  (AI43). 
when  failure   to  present  releases   drawer  and   indorser,  A24I 

(A144). 
presentment;  how  made,  A242  (A145). 
610 


INDEX. 


NEGOTIABLE  INSTRUMENTS  LAW,  THE- Continued. 

on  what  clays  presentment  may  be  made,  A243  (AU6). 
presentment;  where  time  is  insufficient,  A244  (A147;. 
when  presentment  is  excused,  A245  (A148;. 
when  dishonored  by  non-acceptance,  A246  (A149). 
duty  of  holder  where  bill  not  accepted,  A247  (A150). 
rights  of  holder  where  bill  not  accepted,  A248  (A151). 

Protest  of  Bills  of  Exchange, 

in  what  cases  protest  necessary,  A260(A152). 

protest;  how  made,  A261  (A153J. 

protest;  by  whom  made,  A2(52  (A154). 

protest;  when  to  be  made,  A263  (Alo5). 

protest;  where  made,  A264  (AloG). 

protest  both  for  non-acceptance  and  non-payment,  A265  (A157). 

protest  before  maturity  where  acceptor  insolvent,  A2(J6  (A158). 

when  protest  dispensed  with,  A267  (A150). 

protest;  where  bill  is  lost,  et  cetera,  A268  CA160). 

Acceptance  of  Bills  of  Exchange  for  Honor, 
when  bill  may  be  accepted  for  honor,  A280  (A161). 
acceptance  for  honor;  how  made,  A281  (A162). 
when  deemed  to  be  an  acceptance  for  honor  of  the  drawer   A'>8'> 

(A163). 
liability  of  acceptor  for  honor,  A283  CA164). 
agreement  of  acceptor  for  honor,  A284  (A165). 
maturity  of  bill  payable  after  sight;  accepted  for  honor,  A285 

CA166;. 

protest  of  bill  accepted  for  honor,  et  cetera,  A286  (A167). 
presentment   for  payment  to  acceptor  for  honor;  how  made 

A287  (A168). 
when  delay  in  making  presentment  is  excused,  A288  (A169). 
dishonor  of  bill  by  acceptor  for  honor,  A289  (A170). 

Payment  op  Bills  op  Exchange  for  Honor, 
who  may  make  payment  for  honor,  A300  (A171). 
payment  for  honor;  how  made,  A301  CA172). 
declaration  before  payment  for  honor,  A302  (A173). 
preferene  of  parties  offering  to  pay  for  honor,  A303  CA174). 
effect  on  subsequent  parties  where  bill  is  paid  for  honor.  A304 
(A175). 

where  holder  refuses  to  receive  payment  supra  protest,  A30r, 

(AI7G). 
rights  of  payor  for  honor,  A30G  (A  177). 
Bills  in  a  Set, 

bills  in  sets  constitute  one  bill,  A310  (A178). 
rights  of  holders  where  different  parts  are  negotiated.  A3 II 
CA179). 

liability  of  holder  who  indorses  two  or  more  parts  of  a  set  to 
different  persons,  A312  (A180). 

611 


INDEX. 

NEGOTIABLE  INSTRUMENTS  LAW,  THE  —  Continued, 
acceptance  of  bills  drawn  in  sets,  A313  (A18I). 
payment  by  acceptor  of  bills  drawn  in  sets,  A314  (A182). 
effect  of  discharging  one  of  a  set,  A315  (A183). 

Promissory  Notes  and  Checks, 

promissory  note  defined,  A320  (A184). 

check  defined,  A321  (A185). 

within  what  time  a  check  must  be  presented,  A322  (A186). 

certification  of  check;  effect  of,  A323  (A187). 

effect  where  holder  of  check  procures  it  to  be  certified,  A324 

CA188). 
when  check  operates  as  an  assignment,  A325  (A189). 

Notes  Given  for  Patent  Rights  and  for  a  Speculative  Con- 
sideration, 
negotiable  instruments  given  for  patent  rights,  A330. 
negotiable  instruments  given  for  a  speculative  consideration, 

A331. 
how  negotiable  bonds  are  made  non-negotiable,  A332. 

NEGOTIATION, 

what  constitutes,  AGO. 

See  Bona  Fide  Holder,  Negotiability,  Transfer  of  Bills  and 
Notes,  Indorsement. 

NON  COMPOS  MENTIS.     See  Lunatics. 

NON-NEGOTIABLE  INSTRUMENTS, 
do  not  import  consideration,  50. 
transfer  of,  74. 
effect  of  indorsement  of,  83. 
need  not  be  presented  for  payment  on  day  of  maturity  to  hold  in- 

dorsers  and  drawers,  114  (323). 
days  of  grace  not  allowed  in,  120. 
notice  of  dishonor  is  not  required  in  cases  of,  130. 

NOTARY  PUBLIC, 

must  make  protest,  124. 

NOTE,  PROMISSORY.    See  Promissory  Notes. 

NOTES  AND  BILLS.     See  Bills  and  Notes. 

NOTICE, 

when  fraud  is  inferred  from  inadequacy  of  price  on  theory  of  con- 
structive, 103. 
actual  and  constructive,  of  defenses,  111. 
by  lis  pendens,  112. 
of  dishonor,  when  certificate  of  protest  is,  129. 

NOTICE  OF  DISHONOR, 

necessity  of  notice,  130,  IGO  (444),  A163,  A188. 

who  may  give  the  notice,  131,  AlCl,  A162,  A163,  A164,  A165. 

612 


INDEX. 

NOTICE  OF  DISHONOR  —  Continued. 

to  whom  notice  should  be  given,  132,  A160,  A168,  A169,  A170,  A171 

A172,  ' 

the  time  allowed  for  giving  notice,   133,  A173,  A174,  A175,  A178> 

A179. 
manner  of  giving  notice,  when  important,  134. 
manner  of  giving  notice  where  parties  to  be  notified  reside  in  the 

same  place,  135,  A174. 
personal  notice,  how  and  when  served,  136. 

manner  of  serving  notice  on  persons  residing  elsewhere,  137,  A175. 
what  is  meant  by  "  residing  in  the  same  place,  "  138,  A174. 
form  and  requisites  of  the  notice  of  dishonor,  139  (372),  (404),  A166, 

A167,  A176. 
allegation  and  proof  of  notice,  140  (372). 
waiver  of,  147  (404),  A180,  A181-A186. 
when  notice  necessary  to  hold  guarantor,  100  (444). 
in  the  case  of  checljs,  171-174. 
See  Checks. 
See  Excuses  fou  Failure  of  Presentment,  Protest  and  Notice. 

NOTING  DISHONOR,  127. 


OBLIGATION  TO  PAY, 
must  be  distinct,  18. 

OFFICERS.    See  Agents,  Private  Corporations,  Municipal  Corpo- 
rations, Governments. 

ORDER, 

bills  and  notes  payable  to,  17,  A27. 
transfer  of,  75. 

OVERDUE  PAPER, 

transfer  of,  as  affecting  bona, fide  ownership,  107. 

when  bills  and  notes  payable  on  demand  or  at  .«ight  are,  108. 

transfer  after  default  in  payment  of  installment  of  principal  and 

interest,  109. 
transfer  on  last  day  of  grace,  or  on  day  of  maturity,  HO. 

PAROL  EVIDENCE, 

in  proof  of  date,  7,  8,  (;4. 

in  identifying  parties  or  explaining  signatures,  9,  13,  14. 

in  proof  of  real  character  of  concealed  sureties,  12,  161. 

in  proving  amount  of  payment,  21,  22. 

in  proving  actual  day  of  delivery,  26. 

in  proof  of  collateral  agreements,  31. 

as  to  consideration,  62,  53,  64. 

in  proof  of  date  of  acceptance,  64. 

as  to  fact  of  acceptance,  66. 

of  agreement  to  accept,  69. 

613 


INDEX. 

PAROL  EVIDENCE  —  Continued. 

to  prove  time  and  place  of  indorsement,  91. 

to  prove  real  character  of  irregular  iudorsers,  92. 

of  ownership  of  bills  and  notes,  116. 

as  a  substitute  for  certificate  of  protest,  123. 

of  vpaiver  of  presentment,  protest  and  notice,  147t 

of  time  of  alteration,  152. 

PARTIES  TO  BILLS  AND,  NOTES, 
dravFer  or  maker,  9-12,  AUO,  Alll. 
drawee,  13. 
payee,  14. 

fictitious  or  non-existing,  15. 
same  persons  as  different,  16. 
infants,  33,  A41. 
lunatics,  34. 

drunkards  and  spendthrifts,  35. 
married  women,  36  Cp.  107). 
the  bankrupt  or  insolvent  payee,  37. 
alien  enemies,  38. 

bill  or  note  executed  by  agent,  39,  A38,  A40, 
form  of  signature  by  agent,  40,  A40,  A39,  A74. 
partners,  41  (pp.  107,  112). 
form  of  the  firm's  signature,  42. 
private  corporations,  43  (p.  115),  A41. 
form  of  signature  by  agents  of  corporations,  44  (pp.115,  122,125,127), 

A72,  A74. 
commercial  paper  of  corporations  under  seal,  45. 
drafts  or  warrants  of  one  officer  of  the  corporation  on  another,  46. 
governments,  47. 

municipal  or  public  corporations,  48. 
fiduciary  parties  and  personal  representatives,  49  (p.  137),  59,  A74. 

PARTNERS, 

as  parties,  41  (pp.  107,  112). 

form  of  signature,  42. 

presentment  for  acceptance  to,  59. 

who  may  accept,  63. 

presentment  for  payment  by  and  to,  116,  117. 

as  drawer  or  maker,  11. 

as  drawee,  13. 

notice  to  one  partner,  111,  132,  A170. 

presentment  to,  117,  A137. 

PARTNERSHIP.     See  Partners. 

PAY, 

as  an  expression  of  obligation  not  necessary  to  negotiability,  18. 

PAYMENT, 

time  of,  must  be  certain,  19,  20. 
must  be  unconditional,  20. 
614 


INDEX. 

PAYMENT  —  Continued. 

amount  of,  must  be  certain,  21. 

in  money  only,  22. 

place  of,  23,  114,  118. 

on  acceptance  supra  protest,  71,  A300-A306. 

liability  of  assignors  of  paper  payable  to  bearer,  76. 

presentment  for.     See  Presentment  for  Payment. 

through  clearing  house  (481),  (508). 

distinguished  from  sale  or  transfer,  178  (513),  A200. 

by  whom,  179,  A202. 

to  whom,  180,  A90. 

conditions  of —  legal  tender  —  surrender   of   paper  —  receipt,   181 

(513),  A148,  A134. 
by  bill  or  note  —  presumption  as  to  its  absolute  or  conditional  char- 
acter, 182  (505). 
by  check,  183  (508),  (481). 

PERSONAL  REPRESENTATIVES, 

as  parties,  40. 

presentment  for  acceptance  to,  59. 

presentment  for  payment  by,  115. 

presentment  for  payment  to,  117. 

notice  of  dishonor  given  by,  131. 

notice  of  dishonor  given  to,  132  (379),  A.  189. 

PERSONS, 

defined,  A2. 
primarily  liable,  A3, 
secondarily  liable,  A3. 

PESTILENCE, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  141  (394). 

PLACE  OF  ACCEPTANCE,  (JO. 

PLACE  OF  BUSINESS, 

presentment  for  acceptance  at,  60. 
presentment  for  payment  at,  118. 

PLACE  OF  INDORSEMENT,  91. 

PLACE  OF  NOTICE  OF  DISHONOR,  133,  135,  136. 

PLACE  OF  PAYMENT,  23,  118  (319)  (332). 

presumption  as  to,  where  none  is  stated,  23,  118. 

as  afftcting  rights  of  acceptor  or  maimer  on  failure  to  present  for 

payment,  114. 
as  affecting  question  of   presentment  for  payment  while  there  are 

two  or  more  payors,  117. 

PLACE  OF  PROTEST,  125. 

PLEDGEE, 

may  enforce  accommodation  paper,  64. 
when  a  bona  fide  holder,  56  (295). 

CA5 


INDEX. 

POLITICAL  DISTURBANCES, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  141. 

POSSESSION  OF  SECURITY, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  146. 

POST-DATING, 

of  bills  and  notes,  8,  26,  A31. 

> 

POWER  OF  ATTORNEY, 

signature  by  procuration,  A40.     See  Agent. 

PRIMARY  LIABILITY,  57  (188),  A3. 

PRINCIPAL.     See  Agent. 

PRESENTMENT  FOR  ACCEPTANCE.     See  Acceptance. 

PRESENTMENT  FOR  PAYMENT, 

supra  protest,  71,  A300-A306. 

not  necessary  in  case  of  non-negotiable  instrument,  114  (323). 

for  what  purpose,  and  to  wliom  is  presentment  for  payment  neces- 
sary, 114,  A130,  A144,  A200,  A201. 

by  whom  must  presentment  be  made,  115,  126,  A90,  A132. 

possession  as  evidence  of  right  to  present  for  payment,  116. 

to  whom  should  preHentment  be  made,  117,  A136,  A137,  A138,  A132. 

the  place  of  presentment,  118  (319),  (331),  (332),  A133,  A135. 

the  time  of  presentment  —  days  of  grace,  119  (324),  A131,  A146, 
A146. 

computation  of  time  — legal  holidays,  120  (324),  A5. 

the  hour  of  the  day  for  presentment,  121  (332),  A132. 

mode  of  presentment,  122  (319),  A132,  A134. 

waiver  of,  147  (404). 

when  demand  necessary  to  hold  guarantor,  160  (444). 

of  checks,  171-174  (478),  (491).     See  Checks. 

See  Excuses  for  Failure  op  Presentment,  Protest  and  Notice. 

PRIVATE  CORPORATIONS, 
as  parties,  43  (p.  115). 

form  of  signature,  44  (pp.  115,  122,  125,  127). 
commercial  paper  of,  under  seal,  45. 
drafts  or  warrants  of  officers  of,  46. 
presentment  for  payment  to,  117. 
indorsement  by,  A41. 

PROCESS, 

transfer  by  legal,  81. 

PROCURATION, 

signature  by,  A40. 
PROMISSORY  NOTE, 

defined.  6. 

form  of,  7. 

when  ambiguous,  7. 

when  void,  presentment,  protest  and  notice  excused,  143. 

616 


INDEX. 

PROOF, 

burden  of,  as  to  bona  fide  ownership,  113. 
of  ownership  from  possession,  116. 

PROTEST, 

for  non-acceptance,  58,  59,  60,  64,  71,  A265. 

acceptance  swpra,  71. 

time  for  presentment  for  purposes  of  (345),  A263,  A266. 

the  object  and  necessity  of  protest,  123  (354),  AI89,  A260,  A267. 

by  whom  protest  should  be  made,  124  (345),  A262. 

place  of  protest,  125,  A2G4. 

by  whom  should  presentment  be  made  in  preparation  for  protest, 

126. 
noting  dishonor  and  extending  protest,  127,  A261,  A263. 
contents   of  certificate   of  protest  —  proper  time  for  the  same,  128 

(345),  (354),  A261. 
protest,  evidence  of  what  —  when  evidence  of  notice,  129  (354). 
waiver  of,  147  (404),  A182,  A2G7. 
of  checks,  171-174.     See  Ciikcks. 
See  Excuses  for  Failure  of  Presentment,  Protest  and  Notice. 

PUBLIC  CORPORATIONS.  See  Municipal  Corporations. 


REASONABLE  HOUR. 

for  presentment  for  acceptance,  60. 
for  presentment  for  payment. 
121,  (332). 
what  is,  A4. 

REASONABLE  TIME, 

what  is,  in  determining  time  of  acceptance,  60  (184),  A4. 
in  determining  when  paper  payable  on  demand  or  at  sight  is  over- 
due, 108,  A4. 

RECEIPT, 

demand  of,  as  condition  of  payment,  181. 

RENEWAL, 

agreements  for,  32. 

RESIDENCE, 

when  presentment  for  acceptance  may  be  made  at,  60. 

presentment  for  payment  at,  118. 

sending  notice  of  dishonor  to,  135,  136,  137,  138. 

RESTRICTIVE  INDORSEMENT,  90  (239). 

REVOCATION, 

of  acceptance,  65  (192). 

when  complicated  by  fraud  (192). 

RIOTS, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  141  (394). 

G17 


INDEX. 

SEAL, 

when  does  it  destroy  negotiability,  25  (p.  62). 
ol  private  corporation,  45. 

SECONDARY  LIABILITY,  57  (188),  84,  A3. 

SECURITIES, 

possession  of,  as  an  excuse  for  failure  of  presentment,  protest  and 

notice,  146. 
surrender  of,  effect  on  liability  of  sureties  and  guarantors,  162  (453). 

SICKNESS, 

as  excuse  for  failure  of  presentment,  protest  and  notice,  145. 

SIGHT,  AT  OR  AFTER, 

in  stipulation  of  time  of  payment,  19. 

bills  payable  at  sight  or  given  time  after,   when  presentment  for 

acceptance  must  be  made,  58  (184). 
when  paper  payable  at  sight  is  overdue,  108. 

SIGNATURE, 

of  drawer  or  maker,  9. 
what  is  a  sufficient  (111.  Cas.,  p.  52). 
when  required  in  acceptance,  G7. 
See  Bills  and  Notes. 

SOCIAL  DISTURBANCES, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,  141  (394). 

SPENDTHRIFTS, 

as  parties  to  bills  and  notes,  35. 

SPOLIATION,  150.     See  Forgery. 

STATUTE  OF  FRAUDS, 

applies  to  acceptances,  66. 

SUBSCRIPTION, 

of  owner  or  maker,  9. 
See  Bills  and  Notes. 

SUNDAY,  9,  120. 

SUPRA  PROTEST, 
acceptance,  71. 
what,  admits,  72. 

SURETIES  AND  GUARANTORS,  THE  RIGHTS  AND  LIABILITIES  OF, 

sureties  and  guarantors  distinguished,  157. 

form  and  requisites  of  a  guaranty,  158  (436). 

guaranty  as  appurtenant  to  a  bill  or  note,  159. 

demand  of  principal  debtor  and  notice  of  default,  when  necessary, 
160  (444). 

concealed  sureties  as  accommodation  parties  —  nature  of  their  lia- 
bility—  admissibility  of  parol  evidence  to  prove  real  character, 
161,  128. 

618 


INDEX. 

SURETIES  AND   GUARANTORS,  THE    RIGHTS  AND    LIABILITIES 

OF  — Continued. 

what  will  discharge  guarantors  and  sureties  —  surrender  of  securi- 
ties and  extension  of  time  of  payment,  162,  (440),  (442),  (444), 
(453). 

remedies  of  surety  and  guarantor  —  contribution  between  co-suretiesi 
163. 

liability  of  surety  on  note,  where  agreement  to  procure  other 
sureties  was  violated  (440). 

SURETY, 

supported  by  what  consideration,  63. 

SURRENDER  OF  BILL  OR  NOTE, 
a  condition  to  payment,  181. 

SURRENDER  OF  SECURITIES, 

effect  on  liability  of  sureties  and  guarantors,  162  (453). 

TELEGRAPH, 

serving  notice  of  dishonor  by,  137. 

TELEPHONE, 

serving  notice  of  dishonor  by,  136,  137. 

TIME  OF  ACCEPTANCE,  60  (184). 

TIME  OF  GIVING  NOTICE  OF  DISHONOR,  133. 

TIME  OF  INDORSEMENT,  91. 

TIME  OF  PAYMENT, 
must  be  certain,  19. 

extension  of,  effect  on  liability  of  drawer,  114. 
effect  on  indorsers,  84,  114. 
effect  on  sureties  and  guarantors,  162  (442). 

TIME  OF  PRESENTMENT  FOR  PAYMENT,  119,  120,  121  (324). 

TRANSFER  OF  BILLS,  NOTES  AND  CHECKS  BY  DELIVERY, 

the  assignability  of   choses  in  action    \a    general — non-negotiable 

paper,  74. 
transfer  of  negotiable  bills  ami  notes  payable  to  bearer,  75. 
liability  of  assignors  of  bills  and  notes  payable  to  bearer,  76,  A115. 
liability  of  broker  in  transfer  of  paper  hy  delivery,  77,  Al  19. 
transfer  by  delivery  of  paper  payable  to  order,  78,  106,  A79. 
sale  of  bill  or  note  without  delivery,  79. 
implied  transfer  of  bills  and  notes,  80. 
transfer  by  legal  process  — attachment,  garnishment,  execution,  81, 

106. 
transfer  donatio  mortis  cauga,  82,  106. 

when  transfer  Is  made  in  the  usual  course  of  business,  106. 
checks,  169. 

distinguished  from  payment,  178  (513). 
See  Indorskmk.vt,  for  TRANsKKit  nv  Indorskmbnt. 

619 


INDEX. 

TRANSFER  BY  INDORSEMENT,  83-92.     See  Indorsement. 

TRUST, 

indorsement  in,  90. 

TRUSTEES, 

as  parties,  49. 
as  indorsees,  90. 

ULTRA  VIRES, 

as  affecting  liability  of  private  corporations  to  bona  fide  holders,  43. 
as  affecting  rights  of  bona  fide  holders  of  municipal  obligations,  48. 

UNCERTAINTY, 

as  to  drawer  or  maker,  9,  II,  12. 

drawee,  13. 

payee,  14. 
where  same  persons  are  different  parties,  16. 
as  to  obligation  to  pay,  18,  20. 
time  of  payment,  19. 
amount  of  payment,  21. 
kind  of  money  or  currency,  22. 

USUAL  COURSE  OF  BUSINESS, 

as  affecting  bona  fide  ownership,  106  (285). 

USURY, 

when  inadequacy  of  price  constitutes,  104. 

VALIDITY  OF  BILLS  AND  NOTES, 

as  affected  by  post-dating  and  ante-dating,  8,  26. 
as  affected  by  want  of  drawer  or  maker,  9. 

of  drawee",  13. 

of  payee,  14. 

VALUE, 

defined,  A2. 

bona  fide  holder  must  be  a  holder  for,  102. 
when  inadequacy  of  price  constructive  notice  of  fraud,  103. 
when  inadequacy  of  price  violates  usury  laws,  104. 
when  inadequacy  determines  amount  of  recovery  by  bona  fide  holder, 
105. 

VALUE  RECEIVED, 

sufficient  acknowledgment  of  consideration,  when  required,  24. 

VOID  NOTE, 

presentment,  protest  and  notice  excused  in  case  of,  143. 

WAIVER, 

of  presentment  for  acceptance,  62,  147  (404). 
presentment,  protest  and  notice,  147  (404). 
620 


INDEX. 

WAR, 

as  an  excuse  for  failure  of  presentment,  protest  and  notice,   141 
(394). 

WARRANTIES, 

of  assignors  of  paper  payable  to  bearer,  76. 

WARRANTS, 

of  officers  of  private  corporations,  46. 

of  officers  of  municipal  or  public  corporations,  48. 

WIFE.     See  Married  Women. 

WITHOUT  RECOURSE, 
indorsement,  85  (231) 

WORDS  OF  NEGOTIABILITY,  17. 
in  a  due  bill,  18. 

WRITING, 

when  acceptances  must  be  in,  66. 

621 


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